Starbucks reaped $181 million from unused gift cards, triggering union complaint
Ryan King
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Starbucks reaped $181 million from money left over on customer gift cards in 2021, triggering a complaint from a group of unions.
The Strategic Organizing Center, which filed the complaint with the U.S. Securities and Exchange Commission on Wednesday, is demanding greater transparency about how the coffee giant is managing those leftover funds, which ticked up from $145 million the year prior, the Spokesman-Review reported.
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“Starbucks discloses so little about breakage that this significant, and likely material, aspect of Starbucks’ financial health is a virtual black box for investors,” Michael Zucker, executive director of the organization, explained, according to the report.
Zucker insinuated that the gift card funds could be “masking a failure” on the company’s part to investor expectations in terms of earnings. He also raised concerns the lack of transparency could enable the company to “double-count revenue.”
The organization comprises various unions, such as the parent of Workers United, which has embarked on a mass unionization campaign for Starbucks locations across the United States. At least 250 Starbucks shops have voted in favor of establishing unions, drawing ire from executives. Starbucks has 9,000 locations in the U.S.
Unredeemed rewards accounted for under 1% of sales in 2021 but 4.3% of pre-tax net income, according to the Spokesman-Review.
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Starbucks has contended it believes some of the funds likely won’t get redeemed.
The Washington Examiner reached out to Starbucks and Strategic Organizing Center for comment.