A severe crisis hits Starbucks in the United States: prices and political boycott

There are several influencing factors, economists point out, and one of the most important is prices. Many customers in the United States have been complaining that a simple “mocha coffee” with a sandwich does not go below 6 or 7 dollars, something that represents a small luxury for their regular clientele.

The problem occurs at a global level, although it is seen more clearly in United States and China. Currently, the company faces a new resistance from customers, tired of inflation. Although the cost of living in the world’s leading power is low, for them a small increase in prices is a catastrophe.

But there are also two other important factors. First, the union struggles, since employees talk about employer abuses. And second, a call to boycott the firm for his stance of rejection of the student protests in favor of the Palestinians for the war in the Gaza Strip.

The economic question of Starbucks

A report of the cnn notes that Starbucks revenue fell 1.8% year-over-year globally in the first quarter of 2024.

In the United States, the company’s largest market, sales were reduced by 3%, the largest in years. And at the international level, the decrease was 6%, as a result of the 11% debacle that occurred in China.

There are a series of striking data. Among the people who decided to stop frequenting Starbucks are the “most engaged” customers, such as rewards program members. This number fell 4% compared to the previous quarter.

International sales fell 6%

There is strong customer indignation over the price increase, added to other factors, such as the company’s bad image for rejecting employee unionization.

Union and politics at Starbucks

Starbucks had a good image as a progressive firm. Until the workers decided to unionize in an attempt to deal with schedules and working conditions abusive

At first there was resistance from the company. Only now are they agreeing on salaries and other key points, which has reduced the internal crisis. But it didn’t stop it from hitting his reputation.

The second fact is linked to the war in the middle east. There were several protests in front of Starbucks branches throughout the country calling for a ceasefire between Israel and Hamas.

There were protests against Starbucks branches due to the war in the Middle East

In late October, Starbucks sued the union over a social media post that expressed “solidarity” with Palestinians. Thus, the company became involved in debates about the war in Gaza, which led to a boycott by a sector of the clientele.

Starbucks issued a general statement condemning the violence in the region, but was unable to shake off calls for a boycott on social media.

The CEO of Starbucks, Laxman Narasimhanhe acknowledged before the cnn that sales were disappointings, in part because customers are more cautious with their spending.

On the other hand, he also recognized that “the recent misinformation”particularly in the Middle East, weighed on sales.

The economy and changes in habits

Starbucks’ problems have generated a debate about whether it is just a temporary economic problem, or something more complex than change of habits in the population.

It is not just this cafeteria, but also other global chains such as McDonald’s, Wendy’s and Burger King, which had a decline in sales.

Many analysts believe that Starbucks’ declining sales reveal more about the company than about the broader economy.

“When you look back and see the magnitude of the changesomething that It happened in such a short time.that generally doesn’t point to something that’s macro in nature or price-related,” said Sharon Zackfia, a director at investment firm William Blair.

Both Starbucks and the other large chains are trying to cushion the blow with major promotions and changes in the way they understand their customers. We have to see if that modifies the crisis.