Thursday, June 21, 2018

How Are Things at Starbucks?

Now that it has touted itself as a leader in the social justice wars against white supremacy, Starbucks is having problems. We will refrain from defining cause and effect, but Starbucks stock tanked yesterday when it announced that it was closing 150 stores next year. Retrenchment must be the correct word.

The other correct term is: the price of virtue signaling. The Washington Times has the story:

Starbucks may have appeased progressives with its social-justice workshops and open-bathroom policy, but such moves have failed to caffeinate the company’s bottom line.

The coffee giant’s stock took a tumble Wednesday after CEO Kevin Johnson announced that Starbucks would close 150 company-owned stores next year instead of the expected 50, with an emphasis on underperforming shops in densely populated urban areas, and lowered growth projections.

Did the company’s open embrace of social justice lead to the shutdowns? Apparently, it did.

The Wash Times explains:

Mr. Johnson acknowledged that the decision to shut down 8,000 U.S. stores on May 29 for anti-bias training, driven by the high-profile arrests of two black men in Philadelphia, played a role in the company’s sluggish second-quarter performance.

“In this current quarter, certainly we had an unplanned initiative driven out of the Philadelphia incident, we closed all our stores for training, we had to delay some marketing, but none of that is an excuse,” Mr. Johnson told CNBC. “The fact is the way I think about a growth company at scale is we’ve got to deliver consistent growth, month after month, quarter after quarter, and year after year. And we have not done that.”

In response, Starbucks announced steps to streamline the company and increase its agility by “accelerating product innovation,” “leveraging the growing tea and refreshment category,” and responding to trends toward “health and wellness.”

Now the company is adding a tea business to its coffee business. Surely, that will do the trick. After all, tea is made from leaves. Thus it is greener that coffee. Frankly, I recommend that people cease doing business with a company that thinks its goal in life is to promote social justice. As for shareholders, forewarned is forearmed.


Dan Patterson said...

The stock looks to have broken through support below 51.14 but could that be a form of conservative voices driving a trend? Time will tell. How many stores are closing?

Sam L. said...

Not a coffee drinker, but my Schadenfreude is growing.

Gringo said...

Closings were concentrated in "underperforming shops in densely populated urban areas."

Ironically, just the stores that the SJW Starbucks Style philosophy targeted. After all, the homeless do not tend to be near suburban shops. It would appear that a not insignificant proportion of the typical educated, middle class Starbucks customer came to the conclusion that "our kind of people" was becoming scarcer at certain urban Starbucks sites, and decided to stay away.

I am reminded of what happened to some malls, where an influx of young, "vibrant" - not to mention loud -customers led to not-so-young-or-vibrant customers deciding to stop coming to those malls. Result: mall closings.

whitney said...

I've been buying Starbucks coffee from the grocery store, Cafe Verona, for years. I know some people don't like it but I always have. This latest bout of idiocy made me stop. I just couldn't support it anymore. I find Pete'a coffee is very good also

Ares Olympus said...

It looks like a fast drop (57.4->50.6, 11% drop), but its had 2 larger drops in the last year after a quick rise in 2015. I'd imagine closing weak stores would be evidence they're doing their right thing for their shareholders. But I guess it can be fun to speculate motives when you disapprove of a company's PC practices that risk the bottom line.

All that talk of "growth" is exhausting to me, I couldn't handle a job like that. Meanwhile yesterday I was watching a presentation against all the sugar we put in everything to keep us buying more, and I don't want to be supersized myself. Growth isn't all good. Learn the Facts about Sugar - How Sugar Impacts your Health

Ignatius Acton Chesterton OCD said...

Perhaps they should focus on coffee.