Here's Why Starbucks Is Losing Its Crown

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A Starbucks here, a Starbucks there… The coffee brand is literally everywhere. In any case, in the biggest cities. The undisputed leader in takeaway coffees, Starbucks has nevertheless been in difficulty for several months. Is its reign soon over? ;nbsp;? Maybe so…

This August 2024, the “new” CEO Laxman Narasimhan is leaving his post after only 17 months in office. While this is not surprising given the poor results and other controversies that have affected the company over the past year, the change of CEO at Starbucks does not bode well and could well cause a real tidal wave on the market. We take stock of the last chaotic months at Starbucks as we prepare for the arrival of its new CEO Brian Niccol, currently at the head of Chipotle, in September 2024.

The fall of the Starbucks empire ?

The last few months have been far from easy for Starbucks. Since Laxman Narasimhan took over as CEO, things have gone from bad to worse. Thus, over the year, Starbucks has seen its turnover plummet. To give you an idea, global turnover fell by 3% in the last quarter in July 2024, while it was up 10% in the same period last year. In the United States alone, there was a 2% drop, while in the same period last year, Starbucks posted a 7% increase in its sales in the United States. The situation is just as alarming in China. While this country has always been a key growth market (+46% in the same period last year), the results are much less satisfactory this year.

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Marcelo Braga Luzzi

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The call for a boycott following the Israeli-Palestinian conflict may explain, in part, these poor results. As may a less favorable consumer environment almost everywhere on the globe. Yes, inflation affects everyone. And Starbucks' ideas to attract customers, such as drinks that are reminiscent of the very popular bubble teas, do not seem to take hold.

As CEO of Starbucks over the past 17 months, Laxman Narasimhan has had to face other controversies and polemics. Numerous altercations with unions have done a lot of damage to the company's image. For example, last summer, Starbucks found itself in a dispute with unions, accusing the company of “hypocritical treatment of LGBTQIA+ employees” while in October 2023, Starbucks ended up in court after yet another clash with unions, this time over the Israeli-Palestinian conflict.

That's not all! Activist investor Elliott Management now has shares in the company, and that's not necessarily good news. Indeed, it is an investment fund that does not hesitate to acquire shares in a company in order to strongly influence its management, whether it is a question of restructuring, sale of assets or change of direction. As for Elliott Management, this investment fund has notably shaken up Twitter, Salesforce, Crown Castle and Sensata Technologies.

To make matters worse, former Starbucks CEO Howard Schultz has been constantly attacking the company on social media. After leading the company for over two decades, he has been telling anyone who will listen how Starbucks should move forward from this string of failures. Obviously, this doesn't help Starbucks' image with shareholders and customers.

• Starbucks CEO Luxman Narasimhan steps down after 17 months
• It's not surprising, but it won't be without consequences
• Starbucks has been struggling for months, with big drops in sales in particular

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