Since November 16, Starbucks Corporation has faced a significant downturn, with its market value plummeting by approximately $10.98 billion. This steep decline is attributed to a series of boycotts and employee strikes, which have unfolded over the past few weeks.
The company’s challenges intensified with a lukewarm response to its holiday promotions, particularly the Red Cup Day event. This promotion, offering a free reusable holiday cup with each purchase, failed to attract the anticipated customer interest. Since its announcement in mid-November, Starbucks’ shares have dropped by 8.96%, marking the company’s most severe market value decrease since 1992.
The boycotts against Starbucks are part of a global movement to disengage from brands that economically support Israel. This movement gained momentum following the company’s perceived stance on the Israel-Palestine conflict. The situation escalated when Starbucks filed a lawsuit against its employee union over a post expressing solidarity with Palestine. This post was made in response to the Israeli military operation in Gaza and was later removed, with the union claiming it was unauthorized by its leaders.
Following this legal action, Starbucks employees leveraged the situation to demand better working conditions, including improved scheduling and the freedom to negotiate contracts. This led to a series of consistent employee strikes, further impacting the company’s operations and reputation.
Despite these challenges, Starbucks CEO Laxman Narasimhan remains optimistic about the company’s ability to recover from these “macroeconomic challenges.” However, the current statistics suggest a different scenario. For instance, last year’s Red Cup Day resulted in an 81% increase in consumption, compared to only a 31.7% increase this year.
The recent events at Starbucks underscore the complex interplay between corporate policies, employee rights, and geopolitical issues, and how these factors can significantly impact a company’s market standing and public perception.