Anyone watching Wall Street right now can see that the former caffeine queen is in danger of losing her crown. Between an inflation-concerned market and controversy, Starbucks is losing customers. Still, the coffee giant has a plan… But, will it work? Or, is it too little, too late?
As we previously covered, Starbucks’s earnings hit a slump in Q2. Now, the brand is reporting another drop in Q3.
However, this fall from grace is fairly recent…
IN 2023, THE CAFE CHAIN CONTROLLED 26.5% OF THE COFFEE AND SNACK MARKET IN THE UNITED STATES.
Additionally, last year the company announced plans to cut costs and open more stores.
Despite this strong ending to 2023, Starbucks is struggling to keep its “occasional customers.”
And, here’s what expert analysts think is going on…
Former Starbucks Customers Are Looking for Different Things…
In an interview with CNBC, the managing director of GlobalData Retail — Neil Saunders — shared these insights:
“WHEN YOU’RE THE MARKET LEADER, EVERYONE ELSE COMES FOR YOU AND THEY TRY TO NIBBLE AWAY AT YOUR MARKET SHARE. AND THERE IS A LOT MORE COMPETITION THAN THERE USED TO BE.”
Specifically, consumers are not looking to hang out in coffee shops anymore. As such, Starbucks’ focus on customer experience is falling short of expectations.
Then, there is probably the largest factor working against them — the brand’s notoriously high prices.
Overall, Starbucks has raised the average cost of its menu items by 25%. In contrast, their competitor — McDonald’s — has increased their prices by 40% but are still less expensive.
Still, Saunders says Starbucks is “not irrelevant, growth is just harder to come by.”
In the end, the quick service chain must get things under control quickly…
Because decline in this market is a slippery slope.
Be Great,
GCTV Staff
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