What’s happening at the world’s largest coffee chain?
Global coffee chain Starbucks is facing significant challenges in both the US and Chinese markets. The company announced a $1 billion restructuring plan that includes the closure of more than 100 stores in North America and the layoff of 900 employees, joining the 1,100 laid off in February. These measures reflect a real crisis facing the company, which has seen sales decline for the sixth consecutive quarter in “comparable stores,” indicating the erosion of its brand strength and the shift of customers toward competitors.
In China, Starbucks faces fierce competition from Luckin Coffee, which has overtaken it to become the largest brand in the Chinese market, offering cheaper and faster products. Luckin has not stopped there, but has expanded into the US market with the opening of five stores in New York. This remarkable expansion reflects the challenges facing Starbucks globally.
The current boycotts have resulted in billions of dollars in losses for the company, which senior management has described as a “significant impact.” Brian Niccol, the company’s fifth CEO since 2017, is seeking to rebuild the company through a $500 million investment plan to renovate 1,000 US branches and transform them into luxury “lounges” to encourage customers to stay longer.
This plan aims to boost the company’s sales next year. Will these efforts be enough to save Starbucks from its worsening crisis, or is this an attempt that may prove fruitless?
