By C. J. De Mel, Jadetimes News
Customer Discontent
Andrew Buckley, a self proclaimed "mocha guy," recently abandoned his Starbucks habit after the company's latest price increase pushed the cost of his venti mocha over $6. The 50 year old tech sales professional from Idaho, a loyal customer for decades, cherished his near daily treat as a small luxury during his workday. However, the recent price hike was too much for him.
"It was the straw that broke the camel's back on my feelings of inflation in general. It's like, 'That's it. I can't do it anymore,'" Buckley shared. He voiced his complaints to customer service before taking to social media to vent his frustrations. "I just lost it," he said. "I don't plan to be back either."
Wider Implications for Starbucks
Buckley's decision reflects broader troubles brewing at Starbucks. The company is facing increasing resistance from inflation weary customers amid unionization fights and protests against the company related to Israel's war in Gaza. These issues are fueling boycott calls and tarnishing the brand. In early 2024, global sales at Starbucks dropped 1.8% year on year. In the U.S., the company's largest market, sales at stores open for at least a year fell 3%, the biggest decline outside of the pandemic and the Great Recession.
Some of Starbuck’s most dedicated customers, including rewards members, are leaving. Active rewards members dropped by 4% compared to the previous quarter. Former regular David White has drastically reduced his Starbucks purchases, sometimes abandoning orders mid purchase due to shock at the total cost. White, a 65 year old from Wisconsin, cites outrage over price hikes and the company's stance on unionization as reasons for his discontent.
"They've gotten too full of themselves," he said. "They're trying to squeeze their day to day customers too much and profit via their employees and prices."
Political and Social Pressures
For Buckley, the decision to quit Starbucks was primarily due to price increases, but he also noted that the company's involvement in political issues left a bad taste in his mouth. "This is a coffee shop. They serve coffee," he said. "I don't want to see them in the news."
During a recent conference call discussing the company's latest results, Starbucks CEO Laxman Narasimhan acknowledged disappointing sales, attributing it to cautious customers and "recent misinformation" that affected sales, especially in the Middle East. He defended the brand and promised to revive business with new menu items like boba drinks and an egg sandwich with pesto, speedier service, and various promotions.
Economic Concerns and Brand Reputation
Starbucks CFO Rachel Ruggeri noted signs of revival, citing growth in active rewards members, but warned investors that challenges wouldn't disappear quickly. "We do believe it's going to take some time," she said.
The company's struggles have sparked debate about whether they signal a broader decline in consumer spending that has powered the U.S. economy in recent years. Other fast food giants, including McDonald's, Wendy's, and Burger King, have also reported softening sales and launched discount campaigns to revive interest. However, many analysts believe Starbuck’s sales drop is more indicative of company specific issues than broader economic trends.
Sharon Zackfia, head of consumer at investment management firm William Blair, raised concerns that Starbucks might be losing its appeal. "When you look back and you see the magnitude of the shift... that occurred in such a short time, that doesn't usually point to something that's macro in nature or price point related in nature," she said.
Unionization and Political Backlash
Starbucks has faced years of pressure from union activists concerned about pay and working conditions, challenging the company's progressive image. In late October, after Starbucks sued the union for a social media post expressing "solidarity" with Palestinians, the company became embroiled in debates over Israel's war in Gaza, sparking global boycott calls. Starbucks has blamed misinformation about its views and issued a statement condemning violence in the region. Recently, the company and the union have issued joint press releases claiming progress in contract negotiations.
Despite these efforts, boycott calls have persisted on social media, as noted by a Bank of America analysis. Last month, YouTube comedian Danny Gonzalez apologized to his 6.5 million followers for the incidental presence of a Starbucks cup in a video after backlash.
Analysts like Sara Senatore from Bank of America initially doubted the boycott's impact but now see it as a significant factor in the sales drop. "All you can do is try to dampen the sound or essentially overcome it with other things," she said. "It may just be a matter of time."
Customer Perspectives and Future Outlook
In New York, where Starbucks cafes are densely packed, it was difficult to gauge the business's state. Some shops appeared empty, with customers darting in for mobile orders punctuating the calm. Even loyal customers see room for improvement.
Maria Soare, a 24 year old from Washington, DC, still frequents Starbucks but says recent price hikes "sting" and advises the company to "change the food." Veronica and Maria Giorgia, friends and former regulars, noted a shift in the company's feel. Veronica, 16, cited better options, higher prices, and labor protests as reasons for her decreased visits. "It feels more like a chain," she said. Maria Giorgia, 17, remains a regular but acknowledges the brand's change in perception. "It used to be cool in middle school. Now it's just convenient."