Dear Mr Alstead.
Like many other people, I watched your performance (and it was a performance) in front of the UK Public Accounts Select Committee yesterday. Margaret Hodge, who chairs the Committee, has suggested that UK taxpayers should vote with their feet and have their coffee elsewhere. I will be heeding her words and doing the same. Why? A Reuters report last month showed that Starbucks had paid no corporation, or income, tax in the UK in the past three years. Three years.
Here’s another jaw-dropping fact: The world's biggest coffee chain, of which you are the financial wizard (or perhaps illusionist might be more accurate) paid only 8.6 million pounds in total UK tax over 13 years during which it recorded sales of 3.1 billion pounds.
Your company have also admitted that the Dutch government had granted a special tax deal on its European headquarters, which receives royalty payments from its UK business. You denied that the Netherlands had been chosen as the company's regional headquarters because of its favourable tax rate, saying it was because the company had a major roasting plant located there. Why not set up a roasting plant here in the UK. Paying your usual miserable minimum wage to employees here, it would be cheaper for you than paying the higher wage you do in Holland. I know why. Because you’d then have to pay a fair whack of tax here.
You claim that Starbucks has reported a taxable profit only once in its 15 years of operating in the UK. If that were true, then why on earth are you still here in the UK? What other (UK) company could take losses in the UK for 14 out of 15 years and survive? This must either be rank incompetence on your part (in which case I assume you have received no bonuses for those years when you were in charge) or clever book-keeping that makes a profit look like a loss. Which one is it Mr Alstead? Ms Hodge questioned why your company even continued to do business in the UK, if it was making such perennial losses. I also ask that question. You said to the Select Committee:
"We're not at all pleased about our financial performance here. The most competitive coffee and espresso market we face is here in the UK."
Have you ever dropped into a Starbucks? It is full of well-to-do people paying large amounts of money for coffee that they could get just as good at Café Nero. Starbucks is the place to be seen in. It has kudos. That’s why people pay over the odds. And yet, you still reckon you make a loss? Pull the other leg- it has bells on it!
What you offer here is coffee. It’s not innovative, it’s not clever. Other firms also offer coffee and pay more tax than you, and don’t cook the books. I predict that you will see your sales genuinely fall following your abysmal performance in front of the Select Committee. Rather than phantom losses you will begin to make real losses. And then you will close down operations quicker than you can say “large latte”. Start looking for a new job Mr Alstead. Maybe head coffee roaster for Café Nero?
An Open Letter to Starbucks’ Chief Financial Officer Troy Alstead
Dear Mr Alstead.