Starbucks employees at a Buffalo cafe vote to unionize, a first for the coffee chain in the U.S.

  • Starbucks workers in Buffalo, New York voted to unionize at least one cafe.
  • The National Labor Relations Board is still counting votes on two other locations that participated in the election.
  • Three additional stores in Buffalo are seeking a vote on unionizing, as is one location in Mesa, Arizona.

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  • SBUX

After a months long battle, Starbucks workers in Buffalo, New York supported efforts to unionize at least one local cafe.

The result marks the first successful attempt at unionizing the coffee giant's U.S. company-owned locations since it went public nearly three decades ago and could send ripples through the restaurant industry. The National Labor Relations Board is still counting votes for two other Buffalo cafes.

Workers at the Elmwood Avenue location voted 19 to eight in favor of the union. Shares of the company fell less than 1% in afternoon trading on the news.

The NLRB had twice sided with workers seeking to organize, first allowing the stores to vote as single units instead of opening up the vote to all 20 stores in the region as Starbucks had wanted, a move that typically favors the employer. As a result, 81 workers were eligible to vote instead of 450 across the city.

Then, the NLRB this week allowed the vote count to move ahead for Thursday afternoon. Ballots were mailed in with a deadline of Wednesday evening and the count was streamed via Zoom. The union fight attracted attention from lawmakers including Sen. Chuck Schumer, D-N.Y., Sen. Bernie Sanders, I-Vt., and Rep. Alexandria Ocasio-Cortez, D-N.Y., who expressed support for workers seeking to organize.

Unions are rare in the restaurant industry. Only 1.2% of workers at food and drinking outlets were members of unions in 2020, below the private-sector unionization rate of 6.3%, according to the Bureau of Labor Statistics. But a tight labor market has been encouraging increased efforts to organize. This year has seen union drives by Amazon workers and strikes by John Deere's and Kellogg's employees. But the efforts have not always yielded victories for the labor unions.

Wages, staffing shortages at issue

The union effort at Starbucks has faced strong opposition from management. The company sent top executives and former CEO Howard Schultz to the Buffalo locations, a move that Starbucks Workers United called "union busting." In November, workers filed a federal labor charge, accusing Starbucks of illegal activity like engaging in a campaign of threats, intimidation and surveillance in response to the union push. The company has denied the allegations.

"I certainly apologize if anybody thought that was intimidation. It's actually what I've been doing for 17 years, so whether it was something special to a partner or a situation, I can't speak on every situation," said Rossann Williams, Starbucks' North American president. "What I can speak on is our partners asked us for help and we showed up, and they were absolutely right. They let them down, and we apologized for that."

The coffee chain is known for calling its employees "partners" and touting among the most progressive benefits in the fast food and restaurant space. But wages and working conditions were two of the sticking points for pro-union workers, who said the pandemic exacerbated staffing shortages and pressured employees.

Last quarter Starbucks told investors that fiscal 2022 earnings would be lower than analysts were predicting. The company blamed both the ongoing impact of the Covid-19 pandemic as well as rising costs, which include wages.

In late October, Starbucks announced it would be raising pay for workers based on market and tenure. By summer 2022, its pay floor will be $15 an hour, with an average hourly wage of $17 an hour, up from the current average of $14. Starbucks stock is down 2.5% over the last three months but up less than 6% over the past month.

More battles ahead

Thursday's results hardly mark the end of the fight for Starbucks, as three additional stores in Buffalo are seeking to vote on unionizing, as is one location in Mesa, Arizona. Starbucks CEO Kevin Johnson acknowledged to CNBC's Jim Cramer this week that more stores are likely to organize, but for the other 9,000 locations across the U.S., it will be operations as usual.

"I expect there may be a handful of other stores, but I really believe when I talk to over 7,500 of our store managers just in the last two days and there's strong support for the heritage and history of Starbucks in the fact that we're a partner-centric company. And I believe our green apron partners everywhere are going to stand up, and if they're given a voice, we're going to put our partners first," Johnson said on CNBC's "Mad Money with Jim Cramer" Tuesday.

This is a breaking news story. Please check back for updates.

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