Last week, 2ndVote highlighted how Starbucks is expected to see slower growth and greater competition within the coffee industry. Now The Wall Street Journal is pointing to the same thing — as well as slower implementation of previously aggressive expansion plans.
As seen in the WSJ graph below, Starbucks’ domestic growth rates have slowed dramatically in recent years. Some of this is the natural state of a mature company which is facing competition. But a lot of it is also related to decisions made by its founding CEO and his replacement.
Starbucks Corp. Chief Executive Kevin Johnson is scaling down some of founder Howard Schultz’s biggest initiatives as he seeks to revive sales in the chain’s core coffee shops.
Mr. Johnson is curbing ambitious plans for a related brand of upscale coffee shops that were central to the company’s growth strategy just two years ago.
Under Mr. Schultz’s vision, the chain had planned to open about a thousand Starbucks Reserve cafes, where baristas would brew more expensive coffee using the latest techniques, serve artisanal baked goods and even mix cocktails. In addition, at up to 30 giant Roastery stores, employees would do all those things, plus roast the coffee.
Mr. Johnson is taking a more measured approach to the Reserve and Roastery stores without committing to a grand total. “One thousand was an aspiration,” he said in a recent interview. Starbucks will test whether six to 10 Reserve stores can meet the returns needed before building more, Mr. Johnson said.
Starbucks is under pressure to grow sales in an increasingly crowded coffee market. The company for years posted quarterly U.S. same-store sales growth of 5% or higher but began missing sales targets in 2016.
Some analysts say slower traffic growth coincided with an acceleration in new-store openings as other high-end coffee shops were springing up in urban areas. Lower-priced rivals, meanwhile, became more aggressive in promoting better-quality coffee.
U.S. customer traffic at Starbucks declined for the past two consecutive quarters and was down for the 2018 fiscal year.
None of this indicates that Starbucks is going under any time soon. It is still seeing steady revenue growth. But missing sales projections, fewer U.S. customers, and dialing back growth goals are all signs of a company which could be in trouble.
This is where 2ndVote shoppers come in. Many conservatives purposely avoid Starbucks because of its left-wing ideologies on marriage, religious liberty, abortion, and more. While we promote conscientious habits, we also believe full-bore engagement is even more effective. First, by making your coffee purchases from Starbucks’ competitors, you’ll be reducing their ability to fund left-wing activism. This will reduce Starbucks’ revenues and increase Starbucks’ competitors’ revenues — putting twice the pressure on Johnson to decide whether he wants to run a corporation or a de facto liberal advocacy organization. Second, make sure Johnson and Starbucks know why you’re making this decision.Contact Starbucks!
There are three companies which we recommend putting into your coffee routine instead of Starbucks: Dunkin’ Donuts, Peet’s, and Chick-fil-A. Dunkin’ Donuts’ ranks at a 2.7 out of 5 in 2ndVote’s rankings, Peet’s is a neutral 3, and Chick-fil-A ranks a 4. These companies are all far better on 2ndVote values than Starbucks, and by supporting them you make your 2ndVote activism twice as effective.
Maybe Johnson, who prides himself on discipline and data, will finally listen to what customers want: a coffee company.