Although the first quarter is usually one of the highest-performing times of the year for Starbucks — including both pumpkin spice and red cup season — Starbucks saw a traffic downturn for the quarter ended Dec. 31, 2023, with North America comparable sales up only 5%, driven mostly by menu price increases.
During the Starbucks earnings call on Tuesday, CEO Laxman Narasimhan pointed to the Israel-Palestine conflict as a source of friction in both the Middle Eastern markets and in the U.S., where there have been calls for boycotts of Starbucks from supporters on both sides of the conflict. Narasimhan also explained that slower spending in China contributed to headwinds for the quarter — an issue that was highlighted by Luckin Coffee overtaking Starbucks as the number one coffee chain in China this November.
Starbucks is also targeting the late-night demographic, as several of its industry colleagues were already doing over the past year. Narasimhan announced Tuesday a partnership with delivery startup Gopuff to tap into the late-night and overnight dayparts. Starbucks is conducting a pilot with Gopuff to coordinate delivery orders between 5 p.m. and 5 a.m.
More key announcements included:
- Bank of America is Starbucks Rewards’ second external partner;
- Two new beverages are being introduced for Valentine’s Day;
- Starbucks is introducing three new drinks platforms; and
- Starbucks maintains that it has not committed union-busting.
