Global coffee behemoth Starbucks Corp. (SBUX) has made it clear that it is taking recent news of a racial profiling incident at one of its stores, and the wave of protests that have followed it, very seriously. The company has announced plans to shut down all 8,000 of its U.S. locations next month to conduct an employee racial bias training for its roughly 175,000 employees.
Coffee Giant Moves Quickly to Save Face and Fight Backlash Over Racial Profiling Incident
"I've spent the last few days in Philadelphia with my leadership team listening to the community, learning what we did wrong and the steps we need to take to fix it," Starbucks Chief Executive Officer Kevin R. Johnson said in a statement on Tuesday. "While this is not limited to Starbucks, we're committed to being a part of the solution. Closing our stores for racial bias training is just one step in a journey that requires dedication from every level of our company and partnerships in our local communities."
The announcement from the Seattle-based food and beverage chain comes amid a growing backlash against the company as the news of the arrest of two African-American men at a Philadelphia store on April 12 spreads. First, the two men, who indicate that they were sitting at the store waiting for a business associate to order, were not allowed access to the bathroom. A staffer then asked them to leave. When they refused, a Starbucks manager called the police, because the chain does "not allow nonpaying people from the public to come in and use the restroom." The employees claimed that the men were trespassing because they refused to leave the premises. The prosecutor's office dropped the case on "a lack of evidence that a crime was committed." Starbucks has confirmed that the employee who made the call has been terminated.
A video of the arrest, which shows other customers protesting as six policemen arrested the men went viral on Twitter Inc. (TWTR). Starbucks, which has struggled to revive foot traffic and hedge against the rising popularity of local and artisanal coffee shops, immediately sent its CEO to Philadelphia to apologize to the men in person and discuss the incident with city officials.
Starbucks' racial bias education program, which will be made available to other companies, will be developed with the assistance of a handful of national civil rights groups and experts, including the NAACP Legal Defense and Education Fund, Demos, the Anti-Defamation League, the Equal Justice Initiative and former US Attorney General Eric Holder.
In 2008, Starbucks shut down 7,100 stores for three hours to educate its baristas on the "art of espresso."
SBUX stock has outperformed the broader market this year, up 4.2% year-to-date (YTD) at a price of $59.83 at Tuesday close, compared to the S&P 500's 1.2% gain over the same period.
(See also: Apple, Nike, Starbucks May Be Hit in Trade War.)