Group 1 - The company plans to give a 2% raise to all salaried employees in North America, marking a shift from previous years where raises were determined by individual managers [1] - The 2% raise does not apply to hourly workers, such as baristas [1] - The company is undergoing a turnaround strategy under CEO Brian Niccol, who previously improved financial results at Chipotle [2] Group 2 - Niccol's "Back to Starbucks" plan aims to return the company to growth, involving layoffs of corporate workers and changes in operational policies [2] - Starbucks is implementing zero-based budgeting to manage costs, requiring managers to justify expenses rather than relying on previous budgets [3] - The company is balancing investments in employee shifts and operational changes with cost management strategies [3]

Proposed Reform - "Zero-based budgeting" is a proposed reform aimed at addressing China's debt issues [1] - Almost every province in China has pledged to review its spending [1] Implementation Status - Only a few provinces have established concrete plans for implementing "zero-based budgeting" [1]

Ugly numbers lurk in the books of China’s local governments. Central authorities hope that a reform known as “zero-based budgeting” will help them clean things up https://t.co/xKrV6wH3Kr ...

Core Insights - Starbucks is shifting its strategy from automation to increasing human staffing in stores to improve efficiency and customer experience [1][3][5] Staffing Strategy - The company plans to hire more baristas and provide additional shifts to existing staff to address throughput and experience issues [2][5] - By the end of September, the new labor model and an algorithm for drink preparation will be implemented in approximately 3,000 US stores [3][4] Comparison with Industry Trends - Starbucks represents a counter-trend in the restaurant industry, where many chains are increasingly automating processes with AI [3][4] - The company has found that investments in labor yield better results in order fulfillment compared to equipment investments [5][13] Customer Experience Focus - Additional staffing is expected to enhance customer interactions, allowing employees to greet customers and address their needs more effectively [5][14] - The company aims to balance quick service for on-the-go customers with a more personal experience for those who prefer to stay [7][14] Employee Feedback - Some baristas express skepticism about the effectiveness of additional staffing, citing concerns about being overwhelmed by orders [8][11] - Positive feedback from some employees indicates that extra shifts are necessary to manage busy periods effectively [12] Financial Implications - The announcement of increased labor investment led to a roughly 7% dip in Starbucks' shares [13] - The company plans to manage costs through zero-based budgeting, requiring justification for each expense [13]

Core Viewpoint - Starbucks is implementing zero-based budgeting (ZBB) as part of its turnaround strategy to identify savings while increasing spending on its "Back to Starbucks" plan, which includes hiring more baristas [1][2]. Group 1: Zero-Based Budgeting Implementation - The zero-based budgeting method requires managers to justify all expenditures each year rather than basing them on previous spending [1]. - CEO Brian Niccol emphasized the importance of ZBB in exploring growth opportunities and identifying potential cost offsets during the company's earnings call [2]. - CFO Cathy Smith, who recently joined Starbucks, expressed her support for using ZBB to uncover stranded costs [2]. Group 2: Historical Context and Adoption - ZBB gained traction in the 1970s, notably advocated by former President Jimmy Carter, although it was not widely adopted by the federal government [3]. - Major brands, including AB InBev and Kraft Heinz, have successfully implemented ZBB to reduce costs and improve margins [3][4]. - The strategy has faced criticism for being overly stringent, potentially hindering employee productivity and innovation, as seen in the experiences of former Kraft Heinz employees [4][5]. Group 3: Other Companies Using ZBB - Companies like X (formerly Twitter) and General Motors have also adopted ZBB during critical transitions, such as after Elon Musk's acquisition and in response to pandemic-related disruptions, respectively [6].