From 2012: An Open Response to the Open Letter from Starbucks about not paying tax

I wrote this in 2012. Think it's still relevant today sadly. Hope you enjoy it! A bit of satire on a Tuesday morning.

An Open Response to the Open Letter from Starbucks about not paying tax

07 December 2012

Dear Kris

I don't understand why you have decided that Starbucks should start to pay corporation tax, especially an amount above what is required by law.

I do agree with you that it is good company policy to listen closely to your customers and that acting responsibly makes good business sense. Let me explain how I see this.

Firstly you must have very patient shareholders. You have been in the UK for more than 14 years yet you are still unprofitable here. That's a heck of a long time for shareholders to wait for a return on their investment. And what a whopping amount they have invested. You write that you are investing more than ￡300 million a year into your operation here, and despite this you have still to turn a profit. Let's say that amounts to a couple of billion invested over ten years, just to sell coffee on street corners or in malls. Wow! It takes some going not to make any money selling coffee for over ten years.

If I was global CEO of a company as sizeable and successful as Starbucks I'd have sacked my UK CEO ages ago for not being able to make a penny profit by now. Perhaps as the person responsible for the performance of Starbucks in the UK you could recommend this to your global head so as to improve the situation here? The boss would probably be even more?desperate to sack a CEO who voluntarily offers to pay corporation tax when his organisation is actually not making any profits. It is very irresponsible to give away your investors' money to the tax man when you are always losing money on their investment! Your statement "acting responsible makes good business sense" demands that you don't pay taxes when you are losing other people's money.

It is one thing to listen closely to your customers; it is quite another to do anything they suggest. Instead of paying taxes you cannot afford, as you have been loss-making here for over 14 years, you should tell them just how bad business has been for you and that you'll try harder next year to turn that profit for the first time. I know quite a lot of cafe owners and they seem to manage to make a profit so it is not impossible you know. Be a bit more optimistic! I'm sure your loyal customers will believe you and understand the difficult situation Starbucks are in. After all your customers are decent people, buy from you because you are socially responsible, support Fair Trade, etc so they will definitely support a poor corporation which is struggling to make ends meet.

Next, a piece of advice from someone who has known good and bad times as a businessman. I'd caution against your plans to employ over 1000 apprentices over the next two years, no matter how socially beneficial you think that is. Let's face it, as a loss-making company, hiring apprentices will only raise your costs without increasing your sales, so you'll make matters worse, not better, especially in a deep and prolonged economic crisis. You should try marketing to bring in more customers, get your staff to upsell a bit without annoying the customers, and maybe reduce the salaries and bonuses of the top earners in the company, especially the CEO who frankly is overseeing a dog's breakfast of a company. I mean 14 years without a profit, voluntarily paying tax on losses, and hiring people when?he should be cutting costs. Who is this guy? I'm glad he hasn't been receiving any bonuses in the past 14 years. He hasn't, has he?

Finally, with your corporate social responsibility so strong it might be worth reflecting on the possibility that every time you open a new Starbucks cafe you bring competition to local cafes. People won't drink more and more coffee just because you have opened up so that means you'll be, unintentionally of course?because you are a caring organisation, taking custom away from small cafe owners, meaning they'll have to lay off staff or even close their businesses. I know you'd hate to do that. I've even read statistics that every time a big multinational opens a shop in a town or neighbourhood there are more jobs lost than created. Imagine that! So the most socially responsible thing a caring corporation like Starbucks could do?would be to close your cafes - that way you open up opportunities for the local businesses to thrive and hire more people. Given that you already give the Inland Revenue money you don't earn, perhaps your social policy could extend to mass closures of your shops too? Think of the jobs you'd create and businesses you'd allow to thrive if you did that.

We in the UK are very lucky to have a socially responsible company like Starbucks come all the way from the good old USA to our little island. I think, thanks to your wonderful open letter we know exactly how much to trust you. There have been many unkind words written about Starbucks in the press recently over this misunderstanding about your very poor performance but now that has hopefully been all cleared up. We wouldn't want all those millions of potential customers to think Starbucks was not only being naughty in hiding their true profits from the Revenue, let alone - shudder the thought - that anyone might consider that your open letter was a cynical attempt to whitewash the truth and fool gullible consumers that you were a truly ethical business. But we can all rest assured now that this will not be the case.

Yours in the brotherhood of decent, if not always, profitable CEOs.

Martin Stepek