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Andrew Buckley describes himself as a “mocha lover,” but he gave up his Starbucks habit after the company’s recent price hike pushed his drinks to more than $6.
The 50-year-old, who works in technology sales in Idaho, has been a loyal customer for decades and considers his nearly daily mocha coffee a small luxury that allows him to stretch his legs during the workday.
But the company’s recent price hikes are as high as it can go.
“That was the final straw for how I felt about inflation in general,” said Buckley, who called the company’s customer service department to complain before taking to social media to vent.
“I just lost it,” he said. “And I’m not going back.”
The decision is symptomatic of a larger problem brewing at Starbucks.
The company is facing new resistance from customers tired of inflation, while union fights and protests against the company’s political problems have led to calls for a boycott and to tarnish the brand.
The company’s global revenue in the first quarter of 2024 fell 1.8% year-on-year.
In the United States, the company’s largest and most important market by far, sales at stores open at least a year fell 3%, the biggest drop in years, trailed only by the coronavirus pandemic and the Great Recession.
International sales fell 6%, dragged down by an 11% drop in China.
Among those customers who jumped ship were some of the most engaged: rewards program members, whose active count fell a rare 4% from the previous quarter.
David White, a former regular, said he has stopped nearly all Starbucks shopping in recent months, sometimes leaving orders in the middle of a purchase because he was shocked by the totals at checkout.
He said his anger over price increases was fueled by other company decisions, including a crackdown on workers who tried to unionize.
“They got too complacent,” said the 65-year-old from Wisconsin. “They tried to squeeze too much profit out of their regular customers and squeezed profit out of their employees and prices.”
For Andrew Buckley, the decision to leave the company was due to price, but he noted that the various rumors surrounding Starbucks’ political problems left a bad taste in his mouth.
“It’s a coffee shop. They serve coffee,” he said. “I don’t want to see them on the news.”
In a conference call to discuss the company’s latest results, Starbucks CEO Laxman Narasimhan said sales were disappointing in part because customers were more cautious about spending.
He also acknowledged that “recent misinformation,” particularly about the Middle East, had weighed on sales.
He defended the brand and promised to revive business with new menu items (such as bubble tea and pesto egg sandwiches), faster service in stores and a series of promotions.
Chief Financial Officer Rachel Ruggeri said this week that the company is seeing signs of recovery, noting growth in active members of its rewards program.
The company has no intention of abandoning its expansion plans but warned investors that the challenges are not going away anytime soon.
“We think it’s going to take some time,” he said.
The company’s problems have stoked debate over whether they suggest the carefree consumer spending that has powered the world’s largest economy in recent years may suddenly be losing steam.
Like Starbucks, many other large fast-food brands, including McDonald’s, Wendy’s and Burger King, have reported falling sales and announced deep discounts in an attempt to reignite enthusiasm.
But many analysts believe that Starbucks’ declining sales say more about the company than about the broader economy.
“When you look back and see the magnitude of change in such a short period of time, it’s not usually indicative of a macro or price-related change,” said Sharon Zackfia, chief consumer officer. Investment management firm William Blair expressed concerns that the brand could be losing its shine in a note to clients last month.
The company has been under pressure from a years-long battle with union activists who have raised concerns about wages and working conditions, directly undermining its progressive reputation.
But in late October, Starbucks became embroiled in a debate over Israel’s war in Gaza after it sued a union over social media posts expressing “solidarity” with Palestinians, sparking calls for a global boycott.
Starbucks is not the only US brand to face a backlash over the issue, nor is it the target of an official boycott, divestment and sanctions campaign. After issuing a general statement condemning the violence in the region, Starbucks blamed it on the spread of misinformation about its views.
It has also adopted a different tack with the union in recent months: The two sides now issue joint press releases announcing progress in contract talks.
But calls for a boycott increased on social media in January and have persisted, according to the Bank of America analysis.
Last month, YouTube comedian Danny González apologized to his 6.5 million followers for accidentally including a Starbucks cup in a recent video after receiving backlash.
Although Starbucks executives have remained relatively quiet on the issue in sales discussions, as Zakfia said, “If you think it’s not working, you’ve really buried your head in the sand.”
Sara Senatore, an analyst at Bank of America, said she initially doubted the boycott would have a significant impact, but other reasons did not seem sufficient to explain such a sudden and severe drop in sales, noting that the company’s price increases did not justify its differentiation from competitors.
She said a quick turnaround could be a daunting task, comparing it to the brand crisis Chipotle faced after its stores were found to have sparked an E. coli outbreak, the fallout from which took years to undo.
“All you can do is try to muffle the sound or cover it with something else,” he said. “It’s probably just a matter of time.”
On a recent sunny noon in New York, the density of Starbucks coffee shops was the highest in the world, making it difficult to assess the state of its business.
Some stores seemed empty until customers rushed in to pick up their mobile orders, breaking the calm.
Even loyal drinkers say they see room for improvement.
Maria Soare, a 24-year-old from Washington, D.C., still buys drinks from the company three to four times a week, but her visits have declined since the pandemic, when it became a reason to leave the house.
She called the recent price increases “disturbing” and suggested the company “change the food”.
For friends Verónica and María Giorgia, their feelings about the company have changed.
Veronica, 16, said she no longer goes as often due to a combination of factors: better options elsewhere, rising prices and recent protests by labor activists.
“That was an eye-opener for me,” he said. “It felt more like a chain.”
Although María Giorgia remains a regular customer of the company, the 17-year-old says her perspective on it has changed.
“When I was in high school, I thought it was cool. Now it’s convenient.”
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