Starbucks’s PR Blunder: Blaming Customers Equals Trouble

Domino’s and Starbucks experienced different weeks on Wall Street and in the press, with Domino’s experiencing a 5.6% increase in same-store sales and a 5.6% increase in stock price, while Starbucks saw its stock price crash by 12% after reporting a 4% drop in sales. The company leadership shirked accountability by claiming that sales dropped because customers ordering through the Starbucks app were impatient.

During Starbucks’s quarterly earnings call, CEO Laxman Narasimhan claimed that customers using Mobile Order & Pay put items into their cart and sometimes chose not to complete their order due to long wait times. He also claimed that severe weather impacted both U.S. and total company comp by nearly 3%. CNBC host and investment guru Jim Cramer pushed back on Narasimhan’s claims, stating that other brands in the QSR space didn’t experience the same struggles due to “weather.”

Former CEO Howard Schultz criticized Starbucks’ focus on “occasional customers” whose frugality was blamed for the losses, arguing that the company’s fix needs to begin at home. Schultz argued that the stores require a maniacal focus on the customer experience, through the eyes of a merchant. Starbucks’ solutions essentially amounted to “improve the app speed” and “send out coupons.”

To recover from a bad press cycle, Starbucks should set expectations, use every word needed and none that doesn’t, and focus on core audiences. Instead of throwing words and money at every potential customer, prioritize those who spend the most money with the company. Starbucks’ message last week should have been simple: “Inflation is making life tough for expensive brands. We’re a decades-old company that has made a lot of investors really happy over time, so hang with us because we’re still a wise investment.”

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