Starbucks Clarifies Policy on Allowing Nonpaying Guests -- Update

By Julie Jargon 

Starbucks Corp. tried to dig itself out of controversy Monday by attempting to clarify a policy toward nonpaying guests that generated an onslaught of weekend criticism.

The Seattle-based retailer on Saturday had said it would allow all guests in its U.S. company-owned stores to use its cafes, including its restrooms, whether or not they make a purchase. That announcement, which attracted some support, also drew complaints that cafes wouldn't have enough seats for paying customers and would turn into homeless shelters and drug havens.

On Monday, Starbucks revealed more about the policy, telling The Wall Street Journal that employees now have detailed instructions on what to do if someone is behaving in a disruptive manner, such as smoking, using drugs or alcohol, using restrooms improperly or sleeping.

At issue, in essence, is whether Starbucks views itself as a business that caters to customers, or a quasi-public place generally welcome to all. While many other restaurants and retailers also must manage the issue of lingering customers and nonpaying guests who come in to use restrooms, Starbucks has promoted itself as providing a "third place" between home and work where people can freely exchange ideas. It essentially pioneered the idea that is now generating controversy.

Other restaurants and cafes have followed suit in recent years. McDonald's Corp. and Panera Bread now offer free Wi-Fi and encourage customers to linger. Neither of those companies responded to requests for comment.

"The whole Starbucks situation has opened up a can of worms. In most cases restaurants leave it up to the discretion of the individual restaurant and most are too busy to enforce a policy," said Joe Pawlak, managing principal at restaurant consulting firm Technomic Inc.

Starbucks's piecemeal messaging on the issue and the outpouring of commentary that ensued shows the challenges firms can face in an era when every corporate move can be immediately telegraphed and then dissected by the public at large.

"Often the people with the strongest views on either end of the spectrum will be the loudest online," said Jeremy Robinson-Leon, president of Group Gordon, a corporate and crisis communications firm.

Views over the last few days ran the gamut. "It sounds like Starbucks is turning their stores into homeless shelters. Their coffee is strong but their management is weak," said Ron Raduechel, a 64-year-old retired supply chain executive from Waukesha, Wis., who said he would no longer go to Starbucks.

"I believe Starbucks is doing what's right in their hearts whether its outcome sparks negativity or not," said Johnny Varela, a 31-year-old carpenter in Orlando, Fla. "I think Starbucks is very humanitarian."

The uproar follows the arrest last month of two black men who wanted to use a Starbucks bathroom in Philadelphia. Responding to sensitive issues, especially ones involving race, are particularly fraught for companies.

"CEOs today have to be political savants," said Eric Schiffer, chairman of Reputation Management Consultants.

The dust-up is far from Starbucks's first. It has driven attention to itself before by using its size to try to enact social change. The company in 2015 tried to foster conversations about race relations by urging baristas to write "Race Together" on customers' cups, a move from which it backed away following social-media backlash.

Before the Affordable Care Act was proposed, Starbucks Chairman Howard Schultz decried the lack of affordable health-care for millions of Americans. He caused an uproar among gun-rights proponents when he told U.S. customers that firearms were no longer welcomed in its stores.

Conveying a message of inclusiveness without alienating paying customers is critical for Starbucks at a time when its cafe business is more important than ever.

The company this month agreed to sell the rights to market and distribute its packaged coffee in grocery stores to Nestlé SA so it could focus on its coffee shops. Sales at its U.S. cafes have been slowing.

"Starbucks is making a strategic bet that by defining its own moral code they will continue to attract a core consumer group that will remain loyal, but you max out on that demographic at some point," said Mr. Schiffer, the consultant.

Starbucks, he said, had no choice but to take action rather than just apologizing and then letting the news die down. "The whole goal of managing a crisis is regaining credibility and that comes from aligning words with actions," he said.

Under the procedures for handling disruptive guests, Starbucks said Monday, managers and baristas should first ask a fellow employee to verify that a certain behavior is disruptive and if it is, respectfully request that the customer stop.

Other examples of disruptive behavior include talking too loudly, playing loud music and viewing inappropriate content. The company provided employees with examples of when they should call 911, which includes when a customer is using or selling drugs.

The arrests last month in Philadelphia came after a manager's decision to call the police after the two men asked to use the bathroom without purchasing anything and allegedly refused to leave when asked.

Starbucks quickly apologized for the actions of the store manager, who ultimately left the company. When a video of the men's arrests went viral, people immediately took to social media calling for a boycott of Starbucks.

A couple of days after the news spread, the boycott threats died down.

The company announced a few days later that it would close its more-than 8,000 U.S. company-owned stores on May 29 to conduct antibias training for employees. Later, Starbucks said it settled with the two men for an undisclosed amount.

Write to Julie Jargon at [e-mail]

(END) Dow Jones Newswires

May 21, 2018 17:54 ET (21:54 GMT)

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