Analyst Note| Sean Dunlop |
A widely publicized union vote took place today at three of wide-moat Starbucks' Buffalo, New York, stores, with at least one of those units voting to organize as an affiliate of the Service Employees International Union. Cited goals in the union’s effort include better pay, more staffing in stores, and a longer training period, all of which were featured in management's Oct. 27 initiative (not coincidentally). While the store-by-store approach renders traction more attainable for union proponents, it curtails the rapidity with which sweeping changes can be made across a footprint of nearly 9,000 company-owned and 6,500 licensed stores in the United States. We foresee no immediate changes in the aftermath, with a protracted negotiating period likely to follow, and maintain our $109 fair value estimate.