How Starbucks is defying the labor shortage crisis with transformative perks, not cash teasers like McDonald's

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Starbucks’ industry leading benefits are helping them during the current labor crisis, the CEO told investors this week.

Restaurant chains from McDonald’s to IHOP are struggling to fill jobs as the economy reopens. Starbucks CEO Kevin Johnson said retention is good because of its industry-leading benefits. During the pandemic, Starbucks increased wages and expanded backup childcare perks. See more stories on Insider’s business page.

Restaurant chains are facing hiring challenges as dine-in traffic returns to pre-pandemic levels in various parts of the country.

And in order to field more delivery driver, cook, cashier, and server applications, restaurants are getting creative. A Florida McDonald’s is forking over $50 to get people to show up for job interviews. Morton’s The Steakhouse, owned by Texas billionaire Tilman Fertitta, is offering a $250 sign-on bonus. Meanwhile, Taco Bell is luring prospective applicants by throwing hiring parties at stores and IHOP is hosting a “National Recruiting Day” to fill some 10,000 positions.

At Starbucks, gimmicks and cash teasers are not needed.

CEO Kevin Johnson told investors and analysts on the company’s second-quarter earnings call Tuesday that Starbucks’ investments made over the years in employee benefits are paying off for the chain.

“Unlike what I’ve read about from other companies, our retention numbers are good,” Johnson said during the conference call.

Johnson said “energy and spirits” are high among employees thanks, in part, to specific pandemic-related benefits that Starbucks rolled out last year. This included increasing hourly pay for employees by 10%. The wage increase came as union advocacy groups and some legislators proposed raising the federal minimum wage to $15 an hour.

At the time, Johnson pledged to keep higher wages top-of-mind.

“With these investments, more than 30 percent of our US retail partners are currently at or above $15/hour and we continue on our path to ensure all US partners will be making at or above $15/hour within the coming two to three years,” he wrote in a letter