Starbucks Reputation Hits 10-Year Low

May 31, 2018 by Douglas A. McIntyre

Among the reasons the Starbucks Corp. (NASDAQ: SBUX) brand is so strong are the quality of food and beverage, store ambiance and what appear to be happy and friendly employees. The friendly employee aspect has been a puzzle to some because entry-level workers are paid poorly.

A racial profiling scandal in a Starbucks has changed a lot of these perceptions, with customers and employees. A new study shows the company’s reputation with workers.

New research from the YouGov BrandIndex shows that Starbucks has done poorly since the incident when people are asked if they would be proud of the company if they joined as workers. The study’s conclusion:

Starbucks’ workplace reputation score is at its lowest level in at least 10 years, a difficult blow for a company that has been well-known for its employee benefits and culture, including helping pay for college tuition.

In another measure of the survey, YouGov reported on “purchase consideration,” which is whether people would shop at Starbucks “when they are in the market for their next purchase.” Presumably, these purchases refer to coffee and food. The findings:

Several weeks after the racially-charged Philadelphia incident, the other metric which has not recovered is Purchase Consideration, YouGov BrandIndex’s measurement of potential sales revenue. On April 20, 28% of consumers would consider purchasing from Starbucks the next time they were buying food or drink. For the past couple of weeks, the score has been hovering around 24%, its lowest since April 2017.

While the first set of results speaks to the company’s ability to hire, the second speaks to what may happen to Starbucks store revenue. Starbucks investors won’t have a sign of this until the company reports its next quarterly figures. However, it is safe to assume that store traffic and sales will not be hurt.

Starbucks may recover from its recent problems, but the YouGov research shows that recovery probably won’t come quickly or soon. It has too much ground to make up.