24/7 Wall St. Insights
- Starbucks Corp. (NASDAQ: SBUX) posted a horrible quarter and suspended its forecasts.
- Customer dissatisfaction resulted in a sharp decline in same-store traffic.
- Also: 2 Dividend Legends to Hold Forever.
Starbucks Corp. (NASDAQ: SBUX) posted a horrible quarter and suspended its forecasts. It did not discuss how deeply dissatisfied its customers are and how unhappy its baristas are.
According to Reuters, “Baristas complain about what they say are chronic understaffing and poor pay and benefits, and their inability to easily ban aggressive customers from Starbucks stores. Zealous customers want consistently good coffee.” Such opinions were downplayed in comments that were part of the quarterly revenue presentation. CEO Brian Niccol described the problem as “fixable,” which is unlikely to help solve the trouble quickly, bring back upset customers, or soothe overworked employees. He did mention the benefits that Starbucks workers have. They have not made baristas happier.
Customer dissatisfaction was reflected in a 6% reduction in same-store traffic in the United States and 7% worldwide. The situation in China, which should have been the key to the company’s future growth, dropped 14%. Larger local coffee store chain Luckin Coffee has bested Starbucks.
Starbucks revenue dropped 3% during the quarter to $9.1 billion. Earnings declined from $1.06 to $0.80 per share.
Finally, one barista told Reuters that Starbucks does nothing about “rude and hostile customers.” It is just one employee’s comment, but it doesn’t help the company’s image with its customers or its front-line workers.
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