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Starbucks’ Price Hike Backfires, Driving Away Even Its Most Devoted Fans

Daniel Kim Views  

Starbucks reported that its global sales at the beginning of this year decreased by 1.8% compared to last year. Notably, in the U.S., its largest market, sales at stores open for at least a year fell by 3%.

According to BBC, Starbucks experienced its most significant decline on June 9, following the 2009 financial crisis and the COVID-19 pandemic.

Among the customers who have left Starbucks were some of its most loyal Starbucks Rewards members. The number of active reward members decreased by 4% compared to the previous quarter.

Andrew Buckley, who works in Idaho, introduced himself as a “mocha guy” and told the BBC that he decided to quit Starbucks when the cost of his drink was above $6.

Starbucks also took a direct hit from a boycott movement when allegations spread last October that it supported Israel in the Gaza war and donated funds to the Israeli government and military. Laxman Narasimhan, the CEO of Starbucks, recently said in a conference call that recent sales were disappointing, mainly due to misinformation affecting sales in the Middle East. An analyst at Bank of America, Sara Senatore, explained that Starbucks’ price increases were not significantly higher than its competitors, suggesting that factors other than the boycott are insufficient to explain the recent sales decline.

Meanwhile, Narasimhan said he would take aggressive marketing measures, such as launching new menu items. However, Starbucks’ Chief financial officer, Rachel Ruggeri, commented, “We do believe it’s going to take some time.”

Daniel Kim
content@viewusglobal.com

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