Is Starbucks sinking? The chain has reportedly lost over $11 billion while Starbucks sales suffer (and value) over the course of the past few weeks.
The downslide appears to be due slow sales, failing holiday promotions, strikes among workers, and a boycott that is steeped in controversy related to the ongoing Israel and Palestine conflict. The
Since the promotion of the Red Cup Day on November 16th shares have gone down in value by 8.96%, a huge decrease and they’ve had the “longest losing streak since 1992”.
Red Cup Day is an annual holiday event where locations give out the highly coveted reusable red cups with seasonal designs on them. According to National Restaurant News, the foot traffic from Red Cup Day only saw a 31.7% increase while 2022 had over double that at 81%.
Starbucks is leaning into, and counting on their digital presence (to bolster sales) which engages about 75 million patrons. They hope that by tapping into this avenue they can produce more sales, and repeat customers with promos, and discounts through their digital rewards program. .
Starbucks Chief Executive Officer Laxman Narasimhan said on their digital campaign. “We have digital relationships worldwide with over 75 million customers in terms of their last 90-day activity. … So, we have the ability to reach our customers, and we have multiple levers in terms of how we deal with any uncertainty that we might see.”
With prices rising across the board at every fast food chain, inflation has impacted the frequency at which customers are willing to spend at their favorite chain.
Starbucks isn’t the only fast food chain feeling the heat from lower sales, Burger King has been faltering in spite of a $400 million plan to breathe life back into the brand. With over 400 locations set to close in 2023, multiple franchisees have filed for bankruptcy, and sold off their portfolio of restaurants at auction.
Will this downtrend of value, and sales become the new norm for Starbucks, or is this just an anomaly? Only time will tell…
