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Business

Starbucks CEO's Refugee Comments Sour Customer Views of Chain

Starbucks' consumer perception levels took an immediate hit, falling by two-thirds between Jan. 29 and Feb. 13

A cup of coffee rests on a counter at a Starbucks coffeehouse in Austin, Texas, photo: Reuters/Mohammad Khursheed
By Reuters Whatsapp Twitter Facebook Share
2 weeks ago

LOS ANGELES – Starbucks Corp’s vow to hire thousands of refugees after President Donald Trump’s first executive order that temporarily banned travel from seven mostly-Muslim nations appears to be hurting customer sentiment of the coffee chain.

Trump supporters have used Twitter, Facebook and other social media sites to call for a boycott since Jan. 29, when Starbucks Chief Executive Howard Schultz vowed to hire 10,000 refugees over five years in the countries where it does business.

Schultz in a letter to employees said the promise of the American Dream was “being called into question” and that “the civility and human rights we have all taken for granted for so long are under attack.”

YouGov BrandIndex, which tracks consumers’ sentiment toward companies and their willingness to purchase from those brands, noted that the data around this boycott is different because both measures are declining.

Starbucks’ consumer perception levels took an immediate hit as measured by YouGov BrandIndex’s Buzz score, falling by two-thirds between Jan. 29 and Feb. 13, and have not recovered.

Starbucks Buzz score fell to 4 from 12 during that time. Such scores can range from 100 to -100 and are compiled by subtracting negative feedback from positive. A zero score means equal positive and negative feedback.

Prior to Schultz’s refugee comments, 30 percent of consumers said they would consider buying from Starbucks the next time they made a coffee purchase, that fell to a low of 24 percent and now stands at 26 percent, according to a YouGov spokesman.

“Consumer perception dropped almost immediately,” said YouGov BrandIndex CEO Ted Marzilli, who added that the statistically significant drop in purchase consideration data showed that consumers became less keen to buy from Starbucks.

“That would indicate the announcement has had a negative impact on Starbucks, and might indicate a negative impact on sales in the near term,” he said.

Marzilli noted that the Starbucks holiday “red cup” controversy from November 2015 corresponded with an even larger drop in perception, but no real impact on purchase consideration scores.

Among other things, boycott supporters are urging like-minded friends to support Starbucks rival Dunkin’ Donuts . Representatives from Starbucks and Dunkin’ Donuts declined to comment on the surveys and the boycott’s impact on sales.

The consumer sentiment data comes at a sensitive time for Starbucks, which reported an accelerated decline in traffic to established U.S. restaurants during the latest quarter.

Starbucks executives pinned much of the blame for its traffic setback on a pileup of mobile orders, which caused bottlenecks at drink pickup stations that thwarted walk-in customers.

LISA BAERTLEIN

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