starbucks case study
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Anatomy of a PR response: How Starbucks is handling its Philadelphia crisis
By
Jena McGregor
April 19, 2018 at 7:17 a.m. EDT
Starbucks’
decision
to close all 8,000 company-owned stores for an afternoon to hold “racial-bias” training raises an important question for companies wrestling with how to respond to crises amid racial tension in an era of social media: Can something be a grand gesture that goes above and beyond what many companies would do — yet still not be enough?
The company’s bold move, which was announced Tuesday and followed the social-media uproar and in-store protests that erupted after the arrest of two black men waiting at one of the coffee giant’s Philadelphia cafes, was mostly applauded by crisis management and diversity experts, some of whom called it a “courageous” or even “genius” gesture — especially following an initial statement that drew criticism.
“I think Starbucks is sending a strong message in doing this,” said Jeff Dickerson, a crisis communications adviser in Atlanta. “They’re bucking the trend, because ordinarily when large companies find themselves in this situation, they have counsel who will advise them against” admitting they’d done anything wrong.
Yet this is Starbucks, a brand that has positioned itself in our national consciousness as not just a restaurant chain or retail operation, but as a “third place” meet-up spot for the community. It has long been vocal about its progressive values, whether through its flawed
#RaceTogether
campaign or its founder’s musings on
immigration
or
same-sex marriage
, making an incident like the one in Philadelphia appear even more out of step than it would at other firms.
Starbucks is turning to a type of workplace training that ‘really took off after Ferguson’
As a result, Starbucks had to do more in response than the average company. “You kind of expect Starbucks would do things like this,” said Paul Argenti, a professor at Dartmouth’s Tuck School of Business who studies corporate communication strategy. “The nail that sticks up gets beaten down. They had to do something more dramatic.”
The issue, of course, is racial bias — a complex, systemic problem that some observers said an afternoon of diversity training would do little to change, however well-intentioned or informed it may be. (The company is turning to names like Equal Justice Initiative founder Bryan Stevenson and the NAACP Legal Defense and Education Fund president for guidance.)
“You’re going to close your stores for an afternoon and take on 500 years of America’s brand of racism?” said Nicole Sanchez, CEO of Vaya Consulting. (Starbucks CEO Kevin Johnson has said several times that the May 29 training is only a “first step;” a Starbucks spokesperson did not immediately respond to requests for comment.)
Sanchez and other crisis communications experts said the company’s
initial response
could have been much stronger and more unequivocal. After
video
of the April 12 incident went viral, Starbucks first put out an
apology
two days later that didn’t mention race as an issue and drew criticism for being too legalistic.
“Their initial formal statement did not resonate well with the black community,” said Derede McAlpin, chief communications officer for the Association of Corporate Counsel, who has worked in crisis communications. “I think it didn’t address the heart of the issue.” ‘
Later that day, CEO Kevin Johnson issued a
memo
to employees that expressed “our deepest apologies,” saying “Starbucks stands firmly against discrimination or racial profiling” and sharing that he planned to meet those affected in Philadelphia.
On Sunday, he was out with a somber apology video where he took responsibility for the crisis, saying “the way that incident escalated, and the outcome, was nothing but reprehensible — and I’m sorry.” In response to calls to fire the store manager, Johnson said, “I believe that blame is misplaced. In fact, I think the focus of fixing this — I own it. This is a management issue and I am accountable to ensure we address the policy, and the practice and the training that led to this outcome.”
Gabrielle Adams, a professor at the University of Virginia who studies CEO apologies, said “in this climate, that kind of mea culpa is what’s needed.” In his apology, “he’s saying we recognize this is systemic and we don’t want to be part of it,” she said.
By Monday, Johnson sat face-to-face with the two men who’d been arrested in Philadelphia, as well as the city’s mayor and other officials. Though crisis communications adviser Mike Paul would have liked to see Johnson make that visit faster, he said it was ultimately the kind of human response the occasion called for.
“When you have a highly flammable emotional situation like a racial crisis you must match it with a highly emotional solution in the opposite direction,” he said, rather than a “legal solution” or a “branding solution.” Speaking about Johnson’s
interview
on CNN Tuesday night — the CEO appeared visibly shaken while speaking — Paul said “when I see a CEO with my buddy [host] Don Lemon being emotional, it feels like he was honest.”
Howard Schultz says Starbucks manager showed her own ‘unconscious bias’ — and possibly ‘racial profiling’
But it was Starbucks’ move to close its stores that stood out the most to crisis management advisers. “Starbucks just upped the game for everyone,” said Carreen Winters, chief strategy officer for MWW Public Relations. Comparing the move to Chipotle’s 2016 decision to close its stores to deal with E. coli outbreaks, “what they’re basically saying is bias is at least as dangerous a problem as food safety.”
Some analysts have
estimated
the move could cost the company $7 million. And one of the key elements of a good apology, Argenti said, is to show that it involves some sacrifice: “It’s really hard to think about what other hit you could take than putting your money where your mouth is and getting rid of sales for an afternoon.”
Yet the real test will be what happens from here. A second
allegation
has already emerged in recent days, with a video suggesting a black Starbucks customer was not allowed to use a restroom in California while a white customer was. (In a prior statement provided to The Washington Post, a Starbucks spokeswoman said it took the incident seriously, saying “[we] are working closely with the team to learn from our mistakes” and “we are fully investigating our store practices and guidelines across the company.”)
“They’ve checked the boxes thus far, but people will be watching and looking after the dust has settled here,” Winters said. “They will be under the microscope more than ever before.”
Joint Statement from Starbucks ceo, Kevin Johnson, Donte Robinson and Rashon Nelson
May 02, 2018
•
2 min read
PHILADELPHIA; (MAY 2, 2018) — After constructive conversations, and mediation before a retired federal judge in Philadelphia, Donte Robinson, Rashon Nelson and Kevin Johnson, ceo of Starbucks Coffee Company (NASDAQ:SBUX) reached a settlement agreement earlier this week that will allow both sides to move forward and continue to talk and explore means of preventing similar occurrences at any Starbucks location.
The agreement between the parties stems from the arrest of Robinson and Nelson at a Starbucks store in Philadelphia on April 12 and includes a confidential financial settlement as well as a commitment to continued listening and dialogue between the parties as a means toward developing specific actions and opportunities.
As Johnson said previously, “I want to thank Donte and Rashon for their willingness to reconcile. I welcome the opportunity to begin a relationship with them to share learnings and experiences. And Starbucks will continue to take actions that stem from this incident to repair and reaffirm our values and vision for the kind of company we want to be.”
Robinson and Nelson intend to focus the public reaction to their arrest toward providing opportunities for young people from underserved communities.
Jointly they said, “We appreciate the opportunity to have meaningful discussions with Kevin Johnson and the group around the table to address hard issues. We all recognize the importance of communication about differences and solutions, and that we will be measured by our action not words.”
And as part of the agreement, Robinson and Nelson will have an opportunity to provide input based on their personal experience to former U.S. Attorney General Eric Holder as part of the company’s long-term diversity and equity efforts.
Robinson and Nelson have also been offered the opportunity to complete their undergraduate degrees through the Starbucks College Achievement Plan, a first of a kind partnership with Arizona State University otherwise available to Starbucks partners to earn their bachelor’s degree with full tuition coverage.
The pair are represented by Stewart L. Cohen and Harry M. Roth of Cohen, Placitella & Roth, P.C., a Philadelphia law firm.
Share This Article
The java giant closed all stores for racial bias training after two black men were arrested in Philadelphia earlier this year.
April 12
Two black men are arrested by Philadelphia police after a Starbucks manager called 911, claiming they were trespassing.
A video of the incident quickly goes viral, leading critics to question why the men were arrested and whether race played a factor.
April 14
The Philadelphia mayor’s office and police department launch separate investigations.
Andrew Yaffe, a friend of the arrested men, says he was meeting them at Starbucks for a business meeting. Yaffe is a real estate investor.
Starbucks apologizes to the arrested customers, promising action to shore up in-store practices.
April 16
Protesters demonstrate outside the Starbucks location in Philadelphia. The café manager behind the call eventually leaves the company.
A video of a black man being denied access to a bathroom in a California Starbucks after a white man was given access goes viral.
April 17
Starbucks says it will close its 8,000-plus locations on the afternoon of May 29 to hold training for its almost 175,000 employees.
The curriculum will be developed with a range of experts in countering racial bias. The company goes into damage control, releasing a video statement from CEO Kevin Johnson and lining up interviews with media.
April 18
The Philadelphia store manager that called 911 is identified as Holly Hylton. Her past Facebook posts on Spanish-speaking customers and treatment of employees attract the media’s attention.
Audio of the 911 call is released. Hylton reportedly didn’t warn the two black men she would call the police. Starbucks executive chairman Howard Schultz is interviewed by CBS’ Gayle King. He says he’s “ashamed” by the incident.
The men arrested are identified as Rashon Nelson and Donte Robinson.
April 19
Nelson and Robinson say they feared for their lives. They add they met with CEO Johnson.
April 22
More than 100 members of Omega Psi Phi protest outside the Starbucks where former member Nelson was arrested.
April 26
Johnson says the incident hasn’t hurt sales.
April 30
Starbucks drops the Anti-Defamation League from its racial bias training, saying it will serve in an advisory capacity.
May 2
Nelson and Robinson settle with Philadelphia for $1 each. City officials promise to set up a $200,000 program for young entrepreneurs.
Starbucks also offers to cover full tuition for Nelson and Robinson’s studies at Arizona State University.
May 29
Starbucks closes nationwide for a four-hour training session featuring a film by Stanley Nelson. It costs $16.7 million in lost sales.
Conclusion: Mixed
Starbucks apologized and took action, but may have spread damage by including, then excluding, the Anti-Defamation League.
Takeaways
The initial apology didn’t sufficiently grasp the severity of the action. The store closure follow-up was a grand gesture that went some way to healing the wounds.
The situation was spiraling by the time Starbucks made its second statement. That three-day delay cost the company some traction.
Two black men were arrested in a Philadelphia Starbucks for doing nothing
By
Emily Stewart
Two black men were arrested and escorted out of a Philadelphia Starbucks on Thursday after staff called the police to report they refused to leave; the men hadn’t ordered anything and were reportedly waiting for a business associate to arrive. The staff reportedly called 911 because Starbucks does “not allow nonpaying people from the public to come in and use the restroom,” Philadelphia Police Commissioner Richard Ross told the
Philadelphia Inquirer
. The employees said the men were trespassing and had refused to leave the restaurant.
A
video
of the incident has swept across the internet and sparked widespread outrage, prompting Starbucks to issue a
on Saturday afternoon. CEO Kevin Johnson issued a
lengthy statement
on the incident on Saturday evening and said he wants to meet personally with the men arrested to apologize.
The saga began when a video posted on Twitter on Tuesday showed police arresting two black men in Twitter for “doing nothing,” in the words of the user who posted the video. Two people — not the men — can be heard protesting as the police remove the men’s chairs and escort them out. “This is ridiculous,” one white man says to an officer in the video. The men do not protest.
The video has been viewed more than three and a half million times on Twitter since Thursday.
Police responded to the call and to keep things from “getting out of hand,” he said, and asked the men to leave, as Starbucks did not want them there. Ross defended the officers, saying they “
did absolutely nothing wrong,
” but the police department said it was conducting an “internal investigation.”
There are a lot of questions here, and they’re not just about the police.
The video of the incident shows at least six police officers taking the two men into custody — a high number, given they were doing nothing.
The obvious question: Beyond the police’s response, why were they called in the first place? People meet in Starbucks all the time, and they wait for others in the restaurant before ordering. Starbucks issued an apology on Saturday to the “two individuals and our customers” and said the company is “disappointed” that it led to an arrest. “We are reviewing our policies and will continue to engage with the community and the police department to try to ensure these types of situation never happen in any of our stores,” the statement says.
Johnson in a
longer statement
released on Saturday evening reiterated the apology and said the company plans to investigate the incident and “make any necessary changes to our practices that would help prevent such an occurrence from ever happening again.” He said Starbucks is “firmly against discrimination or racial profiling” and that he hopes to meet the men “to offer a face-to-face apology.”
A second video from the Thursday incident posted on
YouTube
shows an extended version of what happened. The two black men who are ultimately arrested speak calmly to police. A third man, later identified real estate developer Andrew Yaffe, who is white, appears and protests.
“Does anybody else think this is ridiculous?” he asks, calling it “absolute discrimination.” Yaffee spoke with attorney Lauren Wimmer about the incident, and she talked to the
Philadelphia Inquirer
. “He was meeting with the two gentlemen at the Starbucks to discuss business,” Wimmer said Saturday, identifying Yaffe as a friend. “These two guys are business professionals in commercial real estate.”
Wimmer is representing the men who were arrested, who have not been identified publicly. She told the Inquirer she believes the reason for the arrest was “completely based on race” and noted there was “no indication any crime was being committed.”
Starbucks is not the first major restaurant chain to come under fire for racial discrimination. In 1994,
Denny’s
agreed to pay more than $54 million to settle racial discrimination lawsuits; in 2004,
Cracker Barrel
paid $8.7 million in discrimination lawsuits.