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History of Starbucks
Starbucks opened its first coffee shop in 1971.
Starbucks announced Tuesday it was replacing its CEO.
Amid weakening sales and other issues, the world’s largest coffee company said it was tapping in Chipotle’s CEO, Brian Niccol, to become the next Starbucks’ chairman and CEO.
From boycotts to labor disputes to weak demand, here are some of the issues that have been plaguing the world’s largest coffee company in recent months.
READ MORE: Starbucks replaces its CEO with Chipotle CEO Brian Niccol
Starbucks boycotts
The war between Israel and Hamas has created some unexpected conflict for Starbucks.
And it started with a tweet by Workers United, the union organizing its workers.
On Oct. 9, two days after Hamas militants attacked communities in southern Israel, Starbucks Workers United posted "Solidarity with Palestine!" on X, formerly known as Twitter.
The tweet was said to have been put up without authorization of union leaders and was up for about 40 minutes before it was deleted, but it kicked off a legal dispute between Starbucks and the union.
Starbucks sued, saying the post angered hundreds of customers and damaged its reputation.
Workers United responded with its own lawsuit saying Starbucks defamed the union by implying that it supports terrorism and violence.
The dueling lawsuits, which also argue over the use of Starbucks’ name and a similar logo, left a bad taste in some customers’ mouths for multiple reasons.
Customers around the world began boycotting Starbucks over its perceived support of Israel, and others began boycotting in solidarity with the unionization efforts, which have been ongoing since 2021.
Starbucks has openly opposed the union effort and none of the 437 company-owned U.S. Starbucks stores have secured a labor agreement.
Starbucks labor disagreements
The Starbucks Coffee logo is being pictured in Warsaw, Poland, on August 7, 2024. (Photo by Aleksander Kalka/NurPhoto via Getty Images)
Starbucks workers have protested and walked off the job at various times over the last year, hurting sales.
On Nov. 16, workers at several hundred U.S. Starbucks stores walked off the job in protest. That hurt sales on what is usually one of the company’s busiest days of the year.
The union also asked consumers not to buy Starbucks gift cards during the busy holiday season.
Starbucks said it’s pursuing its goal of reaching ratified contracts for those stores this year.
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High prices
Starbucks’ revenue fell 1% in the April-June period as customer traffic weakened in the U.S. and China.
China is Starbucks’ second-largest market with 6,500 stores.
In China, where Starbucks is feeling pressure from lower-priced rivals, same-store sales plunged 14%. Chinese customers visited less often and spent less per visit, Starbucks said.
In the U.S., consumers are getting choosier about where their dollars are being spent amid continuing inflation.
READ MORE: Inflation is down and you deserve some of the credit, economists say
Who is Brian Niccol?
Brian Niccol is set to become the next Starbucks’ chairman and CEO on Sept. 9.
He was previously the chairman and CEO of Chipotle. Before joining Chipotle, Niccol served as the CEO of Taco Bell and has had leadership roles at Pizza Hut.
Mellody Hobson, the chair of Starbucks' board of directors, said Niccol has transformed Chipotle since becoming its CEO in 2018 by focusing on menu innovation, operational excellence and digital transformation.
"Brian is a culture carrier who brings a wealth of experience and a proven track record of driving innovation and growth," Hobson said in a statement. "Like all of us at Starbucks, he understands that a remarkable customer experience is rooted in an exceptional partner experience."