Starbucks Korea's Coffee Subscription In Legal Hot Water – CoffeeTalk

Starbucks Korea’s coffee subscription service, Buddy Pass, has sparked a legal dispute with landlords over rent calculations. Launched in October, Buddy Pass allows customers to pay 7,900 won monthly for a 30% discount on coffee purchased after 2 p.m., along with free delivery. The service aims to maintain customer loyalty and prevent switching to competitors. Starbucks Korea’s first-quarter operating profit rose 7.3% year-on-year to 35.1 billion won, while sales grew 3.7% to 761.9 billion won. The company attributed this growth to an expanding membership base and the launch of premium stores. However, recent lawsuits filed by several landlords accuse Starbucks Korea of underreporting revenue tied to Buddy Pass when calculating rent. Most Starbucks stores in South Korea operate as leased spaces, where rent is calculated as a fixed percentage of net sales. Landlords claim Starbucks used the discounted sales amount, rather than the original price, to calculate rent, resulting in lower payments. Starbucks Korea denies significant impact, stating that Buddy Pass subscribers are a small portion of total customers. Industry experts believe the root cause lies in slowing sales growth rather than the subscription service itself. Despite steady revenue growth since 2020, Starbucks Korea’s operating profit has lagged behind sales increases due to rising raw material and labor costs, fierce competition in the coffee market, and price hikes implemented three times between August last year and January this year.

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