(Reuters) - Starbucks Corp appealed to customers for forgiveness in a row over racial profiling on Tuesday, saying its behavior towards two black American customers last month had been reprehensible as it closed 8,000 stores for anti-bias training.
The company has settled privately with the two men after the incident in a Philadelphia store on April 12 and will try to draw a line under the row with a day of workshops in traditionally slow afternoon hours which Wall Street analysts say will only cost it $5-$7 million in lost business.
Starbucks executive chairman Howard Schultz, the architect of its move into a cafe format in the late 1980s, said in an open letter that the decision to call police and their subsequent arrests "were reprehensible and did not represent the company's mission and enduring values".
"We determined that insufficient support and training, a company policy that defined customers as paying patrons-versus anyone who enters a store-and bias led to the decision to call the police," he said.
Analysts say Starbucks can ill afford the bad publicity at a time of growing competition in a coffee industry which has seen a number of rivals bought out or merged.
British sandwich and coffee shop chain Pret A Manger was sold for $2 billion on Tuesday in the latest move by Germany's billionaire Reimann family to challenge Nestle in the coffee sector.
Starbucks signed a $7 billion licensing deal with Nestle earlier this month that banks on the power of its brand in the United States to strengthen the Swiss company's leading position globally.
Starbucks is closing 8,000 company-owned U.S. stores at around 2 pm local time on Tuesday as a first step in training 175,000 employees on racial tolerance. Some 6,000 licensed Starbucks cafes will remain open in locations such as grocery stores and airports, and those employees will be trained at a later time.
The arrests sparked protests and accusations of racial profiling at the coffee chain known for its liberal stances on social issues such as same-sex marriage.
Black leaders who are advising Starbucks Corp on the training hope it will reinvigorate decades-old efforts to ensure minorities get equal treatment in restaurants and stores, setting an example for other corporations.
"The incident has prompted us to reflect more deeply on all forms of bias, the role of our stores in communities and our responsibility to ensure that nothing like this happens again at Starbucks," Schultz said.
(Reporting by Aishwarya Venugopal in Bengaluru; editing by Patrick Graham)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)