Title: Why Starbucks is suddenly struggling
Headings: Why Starbucks is suddenly struggling
Why Starbucks is suddenly struggling
It has too many locations
There’s too much competition
Retail problems
Technology is no savior
Higher costs
Bad public relations
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Content: But apparently the company is finding there are limits. The chain has 15 million loyalty club members and another 5 million “digital relationships,” numbers every other chain would drool over. It has better mobile and pay capabilities than just about any other restaurant company on the planet. But only so many customers are going to use them. In addition, the heavy use of the company’s online and mobile ordering have generated problems by driving away some less loyal customers. Higher costs
Earlier this month, we wrote about Starbucks’ price increases, and I said they were not necessarily a good idea for a chain struggling with weak traffic. But it’s easy to see why the company has raised those prices. It has to, with labor costs going up, especially in the chain’s more urban markets. Again, price increases tend to drive away less loyal traffic the most, and that’s been Starbucks’ biggest problem. Bad public relations
I don’t think it’s much of a coincidence that Starbucks’ same-store sales are slowing further in a quarter in which the chain had to close 8,000 locations for diversity training after a manager called police on a pair of African-Americans waiting for someone.