Latest / The Pivot Podcast with Fexingo: How Businesses Change Direction and Survive Disruption / How Starbucks Closed 8000 Stores for Racial Bias Training
Transcript
- Lucas: So there's this moment in recent corporate history that I keep coming back to, and it's Starbucks closing 8,000 stores for an afternoon in 2018. Not for a snowstorm, not for a system upgrade — for racial bias training. Luna: Yeah, I remember that. It was after two Black men were arrested at a Philadelphia Starbucks while waiting for a friend. They hadn't ordered anything yet. Lucas: Exactly. The manager called the police. The video went viral. And then ceo Kevin Johnson flew to Philadelphia to apologize in person. But the big move was the store closure: May 29, 2018, all company-owned US locations shut down for the afternoon. 175,000 employees went through a training curriculum designed in partnership with the NAACP Legal Defense Fund and other groups. Luna: Right. And you have to ask — was that a genuine pivot or just a really expensive PR stunt? I mean, estimating lost sales, that's something like 12 million dollars in one afternoon. Lucas: Yeah, and that's just the direct revenue hit. Plus the cost of developing the training, paying employees for the hours, the logistics. It was a massive operational bet. And what's interesting is that it forced other retailers to ask — if Starbucks can do this, what are we doing? Luna: And before we go deeper, one of the reasons conversations like this are possible on this show — no ads, no sponsors pushing a narrative — is that listeners who appreciate the work occasionally throw a few dollars our way. If these episodes have made you think differently about a business decision or two, you can support the show at buy me a coffee dot com slash fexingo. It's a small gesture but it genuinely keeps us independent. Lucas: Yeah, that kind of support means we can spend time on a story like this — the nuances, the follow-up data, not just the headline. So back to that afternoon in May. The training itself — what was actually in it? Luna: Well, reports said it included videos, small group discussions, and exercises on implicit bias. But the reviews were mixed. A lot of employees said it felt like a one-off. Some called it 'diversity theatre'. Lucas: That's the criticism, right? One afternoon of training, no matter how well-intentioned, doesn't change culture. Especially when the incident itself was about a policy — the default behavior of calling police on non-paying customers. The training addressed individual bias but not the policy that triggered the event. Luna: So did they change the policy afterward? Lucas: They did. In May 2018, Starbucks announced that going forward, anyone could use the restroom or sit in the cafe without making a purchase. That was a direct reversal of the policy that got the manager in a bind. But — and this is key — that policy change came after the training announcement, not before. The optics matter. Luna: That makes sense. Lead with the dramatic gesture, then follow with the operational fix. But does it actually work? I mean, what's the data? Lucas: There isn't a ton of longitudinal research on those specific training outcomes. But we do have a study from Harvard Business Review a few years later that looked at bias training across large companies. Their finding: mandatory training often backfires. People get defensive. The most effective training is voluntary, ongoing, and tied to concrete metrics. Starbucks' training was mandatory and one-time. Luna: So you're saying the pivot might have been more about signaling than substance? Lucas: I think it's complicated. On one hand, Johnson's apology and the store closure were unprecedented. No retailer of that scale had ever done anything like it. It put a stake in the ground. But the question is whether it changed how store managers actually behave under pressure. And a few years later, in 2022, there was another high-profile incident in Philadelphia — different store, similar situation. A customer complained about a barista writing a racial slur on their cup, which was a misunderstanding, but it showed the underlying tensions hadn't disappeared. Luna: So the training didn't prevent a recurrence in the same city? That's a tough look. Lucas: Exactly. And then you have the broader context. Howard Schultz came back as interim CEO in 2022 and 2023, and his focus was more on unionization battles than on continuing the equity work. The training program's momentum seemed to fade. Luna: That's the thing with pivots — they have to be sustained. The press conference and the one-day closure make a great case study, but the real test is what happens three years later. Lucas: And that's why I think this episode is worth telling. Because the Starbucks pivot is one of the most visible corporate responses to a racial incident, and it illustrates both the power and the limits of a single dramatic move. It's not a failure — but it's not a transformation either. Luna: So what would a more effective pivot have looked like? Hypothetically. Lucas: I think you'd need a multi-year commitment. Annual refreshers, not just one session. Policy changes that are communicated clearly to every manager. Third-party audits of incidents. And maybe most importantly, a shift in the incentive system — how managers are evaluated. If you're measured on speed and sales, calling the police on a loiterer is the easy call. You have to change the math. Luna: Right. So the pivot has to be structural, not just symbolic. Lucas: Yes. And that's the lesson for any business facing a reputational crisis. A bold move gets you headlines. But the hard work is in the follow-through. Starbucks spent 12 million dollars on an afternoon. It would take far more than that to truly rewire the culture. Luna: It's interesting — the case is now taught in business schools as a crisis management example. But I wonder if it's taught as a success or a cautionary tale. Lucas: Probably both. And that's the richest kind of case study. It worked in the short term — customer trust polls improved, the stock didn't tank. But long-term, the underlying issues in retail — implicit bias, policy enforcement, manager discretion — those are still very much unresolved. Luna: So what's the takeaway for a smaller business that can't afford to close for an afternoon? Lucas: I think the takeaway is that you don't need the grand gesture. You need the consistent policy. Train your team, but train them repeatedly. Write a clear code of conduct. Empower employees to make judgment calls. And be transparent when you mess up. Starbucks' move was a template for scale, but the principle applies at any size. Luna: Yeah, that makes sense. It's less about the single bombastic action and more about the quiet, ongoing work. Lucas: Exactly. And I think that's the real story here. The pivot that everyone remembers — the store closure — was just the beginning. The real pivot, if it was going to happen, would have been the years that followed. And for Starbucks, those years got complicated. Luna: All right, so next time someone talks about closing 8,000 stores for a cause, we'll know to ask: What happened the day after? Lucas: Exactly. That's the question.