Starbucks’ sales have taken a hit as the coffee giant struggles with strikes.
Amid this dip in sales, its stock has suffered a record run of losses, resulting in a 10% market value decline of nearly $12 billion, Bloomberg reported Monday (Dec. 4).
In particular, the chain’s Red Cup Day, during which it gives out reusable red cups to usher in the holiday season, saw a weaker turnout than usual as staff walkouts affected over 200 stores across the U.S., Bloomberg said.
Starbucks only saw a 31.7% increase in foot traffic during their annual promotional event this year, compared to 81% from 2022, according to a report from Nation’s Restaurant News, which cited data from Placer.AI. The report also noted that this year’s traffic was less than half of the recorded bumps from the event in 2020, 2021 and 2022.
Despite weakening sales, Starbucks continues to look to its massive customer base for support.
During a call with analysts to discuss its Q4 results in November, as macroeconomic challenges lead to changes in consumer behavior for some restaurants, the firm is tapping on the digital connections it has with its customers to engage them.
“Unlike 2008, which is a number that people have been touting around, we have a widely more diversified set of channels that we participate in,” Starbucks Chief Executive Officer Laxman Narasimhan said. “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.”
The ability to combat consumer pullback is significant, given that, as restaurant prices continue to rise, diners are becoming more hesitant to spend. A PYMNTS survey of more than 2,300 U.S. restaurant customers late last year revealed that roughly a third of consumers have been making purchases from restaurants less frequently amid inflation.
The company attributed strong sales in the latest quarter to its loyalty program.
During the same call, Starbucks executives noted that the chain had reached 75 million 90-day active digital customers worldwide, and in the U.S., it saw its highest-yet loyalty engagement, with Starbucks Rewards’ 90-day active member count reaching 33 million in the country, with record per-member spending.