Starbucks, an American coffee company and coffeehouse chain, is the subject of multiple controversies. Public and employee criticism against the company has come from around the world, including a wide range issues from tax avoidance in Europe, anti-competitive practices in the United States, human rights issues in multiple countries and labor issues involving union busting, questions about pay equity and ethics in partnerships in Africa.
European tax evasion In October 2012, Starbucks faced criticism after a Reuters investigation found that the company reportedly paid only £8.6 million in corporation tax in the UK over 14 years, despite generating over £3 billion in sales—this included no tax payments on £1.3 billion of sales in the three years prior to 2012. It is alleged that Starbucks was able to do this by charging high licensing fees to the UK branch of the business, allowing them to declare a £33 million loss in 2011. The UK subsidiary pays patent fees to the US subsidiary, purchases coffee beans from the Netherlands subsidiary (where corporation tax is lower than in the UK), and uses the Swiss subsidiary for other "miscellaneous services". A YouGov survey suggested that Starbucks' brand image was substantially weakened by the controversy surrounding how much tax it pays in the UK several weeks after the allegations surfaced.
Starbucks' chief financial officer (CFO) appeared before the Public Accounts Committee in November 2012 and admitted that the Dutch government granted a special tax rate to their European headquarters, which the UK business pays royalties to. Dutch law permits companies to transfer royalties collected from other countries to tax havens without incurring taxes, unlike in the rest of the EU. The CFO denied that they chose the Netherlands as their European headquarters to avoid tax, explaining that the company's Dutch coffee roasting plant was the reason for the decision. Until 2009, the royalty rate was 6% of UK sales, but after being challenged by UK tax authorities it was reduced to 4.7%. The CFO told the committee this reflected costs such as designing new stores and products, but admitted that there was no detailed analysis by which the rate is decided. The coffee they serve in the UK is purchased from the Swiss subsidiary, which charges a 20% markup on the wholesale price and pays 12% corporation tax on profits. Coffee is not transported to Switzerland but the 30 people who work in the subsidiary assess coffee quality. Regarding Starbucks' frequent reports of loss in the UK, the CFO told the committee that Starbucks are "not at all pleased" about their financial performance in the UK. MPs replied that it "just doesn't ring true" that the business made a loss, pointing out that the head of the business had been promoted to a new post in the US and they consistently told shareholders that the business was profitable.
In Ireland, Starbucks' subsidiary Ritea only paid €35,000 in tax between 2005 and 2011 and the subsidiary recorded losses in every year other than 2011. Ritea is owned by Netherlands-based Starbucks Coffee Emea. Their French and German subsidiaries make large losses because they are heavily in debt to the Dutch subsidiary, which charges them higher interest rates than the group pays to borrow. Reuters calculated that without paying interest on the loans and royalty fees, the French and German subsidiaries would have paid €3.4 million in tax. The Dutch subsidiary that royalties are paid to made a €507,000 profit in 2011 from revenues of €73 million, while the company that roasts coffee made a profit of €2 million in 2011 and paid tax of €870,000. Protesters, who were unimpressed by the company's offer to pay £20 million in tax over the next two years, staged demonstrations in December 2012 in affiliation with UK Uncut. In June 2014, the European Commission antitrust regulator launched an investigation of the company's tax practices in the Netherlands, as part of a wider probe of multi-national companies' tax arrangements in various European countries. The investigation ended in October 2015, with the EC ordering Starbucks to pay up to €30 million in overdue taxes, which the EC regards as illegal state support for corporations. A pair of economists from the KU Leuven noted that the Commission did not forbid Starbucks' tax construction as such, pretending that Starbucks is a Dutch company and effectively rewarding the Dutch state for its lenient tax policy.
Marketing strategy
Some of the methods Starbucks has used to expand and maintain their dominant market position, including buying out competitors' leases, intentionally operating at a loss, and clustering several locations in a small geographical area (i.e., saturating the market), have been labeled anti-competitive by critics. For example, Starbucks fueled its initial expansion into the UK market with a buyout of Seattle Coffee Company but then used its capital and influence to obtain prime locations, some of which operated at a financial loss. Critics claimed this was an unfair attempt to drive out small, independent competitors, who could not afford to pay inflated prices for premium real estate.
Tank Day In May 2026, the CEO of Starbucks Korea was fired after criticisms of inappropriate phrasing in a "Tank Day" promotion. The word "Tank" referred to its line of tumblers. The name and the timing of the event made references to tanks and torture in the Gwangju Uprising. The promotion caused protests, calls for boycott on social media, and government institutions in South Korea refused to offer vouchers of the coffee chain. Shinsegae, which owned a majority stake in Starbucks operations in the country apologized. The promotion even attracted criticism from South Korean President Lee Jae Myung. On X, he said that it "insults the victims and the bloody struggle ... What on earth were they thinking, knowing how many lives were taken that day and how seriously that set back our country's justice and history? I am outraged by such a low-class merchant's inhumane behaviour, which denies our country's values of basic human rights and democracy." On June 15, Starbucks Korea announced that more than 2,000 stores in the country will be temporarily shut down on June 22 for a mandatory history lesson by the staff about the Gwangju Uprising. All its stores closed for an afternoon for mandatory training on historical awareness and social sensitivity.
Antitrust lawsuit In May 2008, Starbucks settled an antitrust lawsuit brought by Bellevue coffee-shop operator Penny Stafford. This resulted in a $3.8 Billion loss for Starbucks Seattle; this amount being recently published from Starbucks in April 2020.
Opening without planning permission Starbucks has been accused by local authorities of opening several stores in the UK in retail premises, without the planning permission for a change of use to a restaurant. Starbucks has argued that "Under current planning law, there is no official classification of coffee shops. Starbucks, therefore, encounters the difficult scenario whereby local authorities interpret the guidance in different ways. In some instances, coffee shops operate under A1 permission, some as mixed use A1/A3 and some as A3". In May 2008, a branch of Starbucks was completed on St. James's Street in Kemptown, Brighton, England, despite having been refused permission by the local planning authority, Brighton and Hove City Council, who said there were too many coffee shops already present on the street. Starbucks appealed the decision by claiming it was a retail store selling bags of coffee, mugs, and sandwiches, gaining a six-month extension, but the council ordered Starbucks to remove all tables and chairs from the premises, to comply with planning regulations for a retail shop. 2500 residents signed a petition against the store, but after a public inquiry in June 2009, a government inspector gave permission for the store to remain.
A Starbucks in Hertford won its appeal in April 2009 after being open for over a year without planning permission. Two stores in Edinburgh, one in Manchester, one in Cardiff, one in Pinner and Harrow, were also opened without planning permission. The Pinner cafe, opened in 2007, won an appeal to stay open in 2010. One in Blackheath Village, Lewisham was also under investigation in 2002 for breach of its license, operating as a restaurant when it only had a license for four seats and was limited to take away options. There was a considerable backlash from members of the local community who opposed any large chains opening in what is a conservation area. To this date, the Starbucks is still operating as a takeaway outlet.
Shark fin
Environmental protestors in Hong Kong in June 2018 extended their campaign against Maxim's Caterers to also target Starbucks. This is due to Starbucks awarding regional licenses to Maxims in Hong Kong, Macau, Singapore and Vietnam. On June 15, 2018, protestors targeted Maxim's headquarters in a demonstration that also highlighted Maxim's being a regional licensee for Starbucks.
Overpricing In October 2013, China Central Television accused Chinese Starbucks of over-pricing. The report compared the price of a tall (12 fl. oz., 354 mL) latte in Beijing, Chicago, London, and Mumbai. It was found that Beijing stores charged the most while Mumbai stores charged the least. It was also found that a tall latte cost 4 Chinese yuan (approx. USD $0.67) to make, but it sold at 27 yuan (approx. USD $4.50).
Underfilled lattes In April 2016, a class-action lawsuit was pressed against Starbucks after multiple reported incidents of the company purposely underfilling their latte beverages to reduce milk costs. After two years of legal proceedings, the lawsuit was dismissed.
Fair Trade, Oxfam, and Ethiopian coffee farmers In October 2006, the British NGO, Oxfam, accused Starbucks of financially wounding Ethiopian coffee farmers by violating Fairtrade agreements. Specifically, Oxfam stated that Starbucks was depriving Ethiopian farmers of $88 million a year by depriving the Ethiopian government of trademarking a number of its local coffee beans. Starbucks responded to the accusations by stating Oxfam's claims were misleading, and wished it would stop deceiving the public.
In May 2007, both Starbucks and the government of Ethiopia signed a licensing, distribution, and marketing agreement, recognizing the importance and integrity of Ethiopia's specialty coffee names. These initiatives allow farmer cooperatives to earn more from its coffee brands, and enable poor growers to capture a greater share of the retail price.
Cups "War on Christmas"
In November 2015, Starbucks introduced solid red seasonal cups, unlike previous seasonal iterations that were decorated with winter or Christmas-oriented imagery (such as reindeer and ornaments), but no overtly religious symbols. The cup design was discussed extensively on social media, with some citing it as another example of the "War on Christmas", calling it "cup-gate", and others expressed puzzlement over the outrage generated by a simple cup.Ember, Sydney (November 10, 2015) "Outcry Over Starbucks Holiday Cups" The Wall Street Journal, page B2 Evangelical internet personality Joshua Feuerstein then released a video suggesting that customers tell the baristas that their name was "Merry Christmas" so that baristas were forced to write it on the cups and shout "Merry Christmas" when calling off the drinks. This also started the trend #MerryChristmasStarbucks.
As a response to Feuerstein's video, people began the hashtag #ItsJustACup as a counter to the view that Starbucks "hated Christmas".
#RaceTogether marketing campaign