business news in context, analysis with attitude

After more than six years of doing MNB, it still sometimes surprises me when a certain kind of story generates a lot of email from the MNB community. And one of those is the story about Starbucks being successfully sued by its California baristas, who claimed that the company’s policy of sharing the contents of the tip jar with shift managers was illegal. The baristas won that case in California – to the tune of a $100 million judgment that Starbucks is appealing, and now a Massachusetts barista has lawyered up and is pursuing his own suit. At the same time, Starbucks CEO Howard Schultz reportedly is concerned that the company is misunderstood and that its motives are being misrepresented in the media.

One MNB user wrote:

I think the whole idea of tipping the flunkies at Starbucks is silly. McDonalds would never insult customers by shaking them down with tip jars. And by doing so, avoids these frivolous law suits. Starbucks should simply remove the tip jars and put big "NO TIPPING PLEASE" signs up. This would help Starbucks regain some credibility with its customers.

MNB user Aaron Algazy wrote:

Regarding your comments on “I don't know what this barista is making up in Boston…but I’m surprised if his wages were below the mandated minimum”.

In many States service workers such as waiters and waitresses can make less than the Federal Minimum or State Minimum wage. This is how some businesses keep their doors open. The workers make more in tips than they do per hour. I have even heard that some work for nothing except tips. This is a contract that the workers agree to with the business. One waitress I spoke with said that if she didn’t make enough in tips to equal her ‘contract wage’ per hour, the business supplements them up to at least the agreed upon ‘contract wage’ minimum.

This is when I noticed that in different restaurants how much service varies. National chains pay minimum or possibly a little more (but doubtful). But at local independents where the workers make less or nothing per hour and solely working for tips, the service is drastically different. The local independents are much nicer and happier and by far more helpful, thus making the Customer happier to tip better.

At least this is what I have noticed when I eat out, and that is a lot more than I eat at home.

MNB user Geoff Harper wrote:

In the Boston Globe version of this story, the lawyer (Shannon Liss-Riordan) said that Matamoros and other Massachusetts baristas made above the minimum wage, but that the law applies anyway. Apparently, she feels she can make a case that the sharing of tips for this group is illegal, even though the law was passed in order for others to be paid less than minimum. It also says, as you suspected, that she spoke with Matamoros after learning of the California award.

Also, for someone who is trying to re-instill a culture in the company, Howard Schultz looks very foolish, both in ranting about "irresponsible headlines" without explaining what was incorrect, and in righteously defending the company's honesty. My guess is that he is responding to headlines that suggest that the company profited: "Starbucks skimmed from tips". By responding to the headlines, he has totally, and probably intentionally, avoided answering the issue.

Another MNB user wrote:

The tip jar is a somewhat antiquated idea. When did we have to start tipping everyone.

The tip jar at a local Starbucks here in Saint Louis was the reason one man died. Well not quite. A man witnessed two teens stealing a tip jar from Starbucks. Ran out and tried to stop him. They hit him with their car and he died a few days later in the hospital. They eventually caught the teens and are in prison awaiting trial.

But the next week that tip jar was right back in the front of the counter at that and all Starbucks. For a company that seems to position themselves as trendy, hip and upscale. Let's lose the tip jar and just pay our employees a decent wage. After all the coffee isn't cheap, neither should the company be to its employees.

I don't mean to be heartless here, but while what you describe is indeed a tragedy, I don't think you can blame it on the tip jar. Maybe we could actually blame it on the teens who tried to rip off the store…

MNB user Michael Core wrote:

Let's get straight to the point. Why do people even tip at Starbucks? You would never dream of tipping at a McDonald's. Please explain the difference between fast food and fast coffee. At $4.44 for a triple venti non fat latte, I think the can afford to pay shift supervisors a bit more than the front line servers.

I would observe here that nobody has to tip at Starbucks. It is an option, nothing more. I don't mind it because I know that a lot of students work there, and I’m happy to help. (Though I’m certainly doing my share of helping college students just by paying two college tuitions these days.) But I never feel compelled.

And here’s the other deal. I’d actually like it if McDonald’s had a tip jar…since on those exceedingly rare occasions when I actually go there, they never get the order right. So not tipping would be a nice way of expressing disapproval.

On the subject of the credit/debit card security breach at Hannaford Bros., MNB user Andy Casey wrote:

I don't know, Kevin, seems like someone dropped the ball somewhere. And as a consumer, it is a little surprising to learn there is a data stream bad guys seem to find attractive (and useful) that industry rules don't call for merchants and banks to protect. What is up with that?

Bottom line is, when a retailer takes my card, I don't think it unreasonable to expect them to make sure the system is secure regardless of whose responsibility it technically is to do so.

I agree…but I do think that the bad guys generally are the hardest guys to keep up with…because they see opportunity where other people do not. That’s what makes them bad guys. (If they had other motivations, they’d be called entrepreneurs.)

On the subject of the FDA, changes that need to be made in the nation’s food safety system, and its apparent desire to not be completely transparent in providing the consumer information about recalls, MNB user Dan Jones wrote:

The Charter for the FDA is too broad – and in gov’t, rarely is bigger better.

We should have a Food Administration, that just worries about food and packaged goods, and a separate division that focuses on drug trials etc. A smaller, focused department could actually make some progress, and make a difference. The sad fact is, I can not imagine this pragmatic approach being taken in Washington.

Another MNB user wrote:

Perhaps the government can take the farmer subsidies and give the dollars to the FDA budget. Wall Street Journal (3/27/08) article indicating that for the past several years the average farmer income has risen to be substantially above the average family income. That the government was looking at cutting the subsidies but lobbying efforts kept that from happening. Farmers do have a vested interest in a well run adequate FDA agency.

And still another MNB user chimed in:

There is something about the FDA that I do not understand...It seems their mission statement is about protecting the public (see below), yet, if you consider the number of deaths, poisonings, and potential long-term health risks the public experiences annually from tainted food, toys, drugs not to mention the number of food and drugs that are just ineffective or damaging, I have to ask, have they ever read their mission statement? How much money will it take for them to be motivated to carry out their responsibilities. Will any amount of money resolve their issues?

Money is one thing. Will is another.

Finally, MNB noted last week that a wine sold exclusively at Tesco’s Fresh & Easy stores in the US has been rated with 90 points by The Wine Advocate, considered a coup for the retailer and a real find for oenophiles. The wine, Bodegas Palacio's Reflexion Rioja Reserva 2003, sells at $9.99 and is one of more than 60 own-label wines sold at Fresh & Easy …which I suggested could be a real differential advantage.

MNB user Phyllis Palmer wrote:

So have you tried it or are familiar with it? Inquiring minds want to know.

Nope. The closest Fresh & Easy is more than 2,000 miles away…but I intend to at the first opportunity.

KC's View: