Starbucks breaks tradition, no Esop for staff of Tata JV

Tags: Companies

Instead, firm offers discounts on items, 6 months’ maternity leave

Tata Starbucks, the 50:50 joint venture between BSE-listed Tata Tea and Nasdaq-listed Starbucks Coffee Company, whose first outlet in India has been a runaway success with people queuing up to get into the store, does not plan to implement the Seattle-based coffee major’s global policy, of offering employees stock options in the company in India.

Starbucks in the US is renowned for the comprehensive health coverage it offers part-time employees and equity in the company in the form of stock options through a programme cal­l­ed ‘Bean Stock’. Ho­ward Schultz, president and CEO of Starbucks Coffee Company, was the brain b­ehind both these progra­mmes, which are designed to reward Starbucks employees for the differentiated service they provide its customers that builds and engenders brand loyalty.

“The core of our success is our green apron employees and the experience they provide. It is our people who bring it to life. We work to attract and retain and develop quality people. We will invest in them and give them the opportunity to progress with training and development and giving them locally competitive pay package and share the success of the company by giving them health benefits coverage benefits,” John Culver, president Starbucks Coffee China and Asia Pacific, told Financial Chronicle recently. He clarified that stock options are not part of the rewards they are offering employees in India.

To train employees in India, Starbucks has even seconded some of its ‘Star team’ baristas from its global operations to the cafes it has opened in India, on a short-term assignment of a couple of months. They will work alongside around 100 Indian staffers who have been trained by Starbucks personnel in Seattle and other stores to ensure the Starbucks service experience is delivered to customers.

Speaking at the launch of the first Starbucks outlet in India in October 2012, Schultz had said, “Passion and service will distinguish us from other coffee chains in India. The experience will capture the imagination of the consumer by exceeding expectations.” “We expect to build a very sizable business here and this can become one of the largest markets in the Starbucks world. With Tata’s help, we will build the market significantly,” he had added then in Mumbai.

In an email statement, Avani Saglani Davda, CEO of Tata Starbucks, this week, said, “We pay our partners a starting wage of 41.40 pence (Rs 35.79) per hour with additional benefits such as medical insurance, accident insurance, and statutory benefits. Partners in India (employees on the payroll) are offered a 30 per cent discount on all in-store items, stipulated coffee and food consumption in-store on all working days, and six months maternity leave and seven working days paternity.

However, Tata Starbucks also has contract employees who are supplied by other agencies who are paid at the minimum wage stipulated by the state government and in some cases around 20 per cent higher than the minimum wage stipulated by the state government. These contact employees typically manage non customer facing roles, said a company spokesperson.

Incidentally, apart from not seeing a need to offer generous compensation (such as ESOPs) that is not the norm in the quick service restaurant industry in India, Starbucks may also have decided not to introduce the Bean Stock programme in India as the $100 billion Tata group does not, as a policy, offer stock options to its staff.

Culver said that the stores in India would, in the initial stage, focus on sale of food and beverages and packaged consumer products such as its Starbucks ice cream and merchandise such as music, books, among others, would happen at a later stage.

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