Decrease in Customer Visits Due to Inflation Impact
Customer Complaints Rise Amid Long Wait Times
Ultimately, Bonus Cuts Decided
Starbucks is reportedly facing a significant reduction in employee bonuses as it experiences a crisis of poor performance.
On the 27th (local time), Bloomberg News published an article titled "Starbucks Employees Receiving Only 60% of Bonuses After the Worst Year Since 2020." The outlet cited an anonymous source stating that Starbucks recorded lower-than-expected results in the fiscal year ending September 29, resulting in many employees receiving only 60% of their total bonuses.
Additionally, the media reported that Starbucks' sales, which had declined during the 2020 COVID-19 pandemic due to the impact of remote work, increased by less than 1% this time. Operating profit decreased by 8%. This poor performance contrasts sharply with the double-digit growth Starbucks experienced over the past three years.
The decline in Starbucks' performance is attributed to a decrease in customer visits caused by widespread inflation, combined with customer complaints about long wait times and inaccurate order handling. Furthermore, like other major U.S. corporations, the boycott movement triggered by the war between Israel and the Palestinian militant group Hamas was also analyzed as a factor damaging sales.
According to a separate document obtained by Bloomberg, Starbucks employees' bonuses, typically paid every December, are calculated evenly based on individual performance and company results. Brian Niccol, the new CEO, said, "It is clear that we must fundamentally change our strategy to win back customers," adding, "We have a clear plan and are moving quickly to return Starbucks to growth."
Earlier, facing poor performance, Starbucks introduced reform measures such as eliminating additional charges for plant-based milk. According to the Financial Times (FT) and others on the 30th of last month, CEO Niccol announced sales growth plans including these measures during his first earnings call. Starbucks plans to eliminate extra charges for adding plant-based milk such as soy milk when ordering drinks like caf? latte and cappuccino, effectively reducing prices by more than 10%. This policy was implemented in company-operated stores in the U.S. and Canada, with other stores deciding on application based on local market conditions. At that time, CEO Niccol said, "The performance is very disappointing, and it is clear that a strategic change is necessary to regain customers and growth."
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