Starbucks is offering $1,200 bonuses, expanded tipping, and weekly payouts to boost the pay of its U.S. baristas

Coffee giant Starbucks is looking to encourage its baristas and hourly workers to improve their sales and customer service by sweetening the pot with bigger financial perks.

The $103 billion coffee chain announced on Thursday that it would expand bonuses and tipping options in a bid to boost worker pay. Starting this July, all of its U.S. hourly workers, including baristas and shift supervisors, can make up to an additional $300 each quarter—amounting to $1,200 a year—when their stores meet or exceed sales, operational, and customer service goals.

There will also be new pathways for customers to tip their baristas. Currently, tipping is restricted to patrons who place orders in-store and at the drive-thru and pay with cash, credit cards, or mobile transactions via Starbucks cards. But under the new policy rolling out this summer, customers will also be able to tip when paying with a credit card for mobile orders and when scanning and paying at the register.

Thanks to the new bonus and tipping incentives, Starbucks estimates that eligible U.S. employees will earn 5% to 8% more than what they earn today. The Seattle-based coffee chain said its baristas and shift supervisors currently earn more than $30 an hour on average in pay and benefits. Under the new plan, paychecks will go out weekly instead of twice a month, with the first quarterly payout hitting this fall.

“The new incentive rewards program recognizes partners for the progress they make possible,” Starbucks said in its Thursday announcement, adding that the cost of the bonuses should be offset by “improvements to coffeehouse performance and operations, and the customer experience.”

Fortune reached out to Starbucks for comment.

Starbucks’ $500 million turnaround effort and union tensions

The coffee chain’s new pay perks come amid a $500 million turnaround effort and ongoing tensions with unionized workers.

Starbucks CEO Brian Niccol, who took the helm of the coffee giant in 2024, has been striving to improve customer service in hopes of boosting sales. The company has invested around $500 million as part of its “Back to Starbucks” push to increase staffing during rush times; pay out additional hours; and expand worker rosters. So far, something has clicked; global sales at Starbucks locations grew 4% last quarter, and the company’s shares rose 7.3% this year through Thursday.

Meanwhile, the billion-dollar coffee behemoth has yet to agree to a contract with the Starbucks Workers United union, which has been advocating for higher wages and stable work schedules. The union, representing workers at approximately 600 of its 10,000 U.S. stores, is set to negotiate with the company later this month.

The new incentive plan changes are subject to collective bargaining at the unionized locations—and the union tells Fortune it’s a reaction to its continued push for higher take-home pay. The group says it will continue to fight for better store staffing, wages, and consistent scheduling, and that the new pay perks are subject to others’ discretion.

“It’s notable that these bonuses and tips will be largely out of baristas’ control, relying on customer tipping and store performance metrics as determined by Starbucks management,” the group tells Fortune in a statement. “Union Starbucks baristas have been raising the alarm on low pay, inconsistent hours, and understaffing for years.”