Starbucks Is Losing Millions of Customers Because of These Reasons

By: Alyssa Miller | Published: Jun 19, 2024

Despite the menu changes, new drinks, and expanding opportunities for employees, Starbucks is losing too many customers.

While this isn’t an isolated problem in the fast food industry, Starbucks—a globally successful coffee chain—has several reasons for the dip in their sales in the last quarter, according to the former CEO.

The Downfall of the Biggest Coffee Chain

The biggest coffee chain in the world reported its first drop in quarterly revenue since 2020. The slowdown in store traffic was noticeable in the United States, with sales down 3% from January through March.

A Starbucks logo with a drive thru sign underneath.

Source: Matty Cardy/Getty Images

CEO Laxman Narasimhan reports that the quick-service offerings are no longer appealing to customers who have become more budget-conscious.

The Luxury of Starbucks Is Unaffordable

A cup of coffee is a luxury these days. Starbucks customers are paying an average of $6 for a standard latte. On top of that, the wait times for these coffees are extremely long, making this “quick-service” item an inconvenience for people on a schedule.

Exterior view of a Starbucks coffee shop with a black facade and large glass windows, showing customers inside and the green Starbucks logo prominently displayed

Source: Wikimedia Commons

This dissatisfaction highlights the fundamental disconnect between Starbucks’ premium status and its actual value according to consumers.

The Reason Behind Customer Loss

“Many customers have been more exacting about where and how they choose to spend their money, particularly with stimulus savings mostly spent,” Narasimhan said during an earnings call in May (via CBS News).

Image of a Starbucks logo illuminated on the side of a building with a modern architectural style, framed by silhouetted leaves against a dusk sky showing hues of pink and blue

Source: Luis Aleman/Unsplash

“We saw this materialize over the quarter as customers made the trade-offs, but being food away from home and food at home.”

Updates Coming to Starbucks

Starbucks plans to turn things around by including updates to its app and mobile payment offerings, speeding up service, and overhauling its menu to lure customers back.

A smartphone open to the Starbucks Reward App next to a Starbucks coffee

Source: Depositphotos

“The consumer is starting to feel the bite of tighter finances, and Starbucks is one of those indulgent luxuries that people can easily cut out,” said Neal Saunders, managing director of retail at GlobalData.

The Former CEO’s Suggestions

However, former Starbucks CEO Howard Schultz, who helped the company expand around the globe for decades, believes that the company needs to refocus its values rather than chasing gimmicks like boba and sugar-free options.

Three people holding up three iced drinks from Starbucks

Source: bffsandbrunch/Instagram

“The stores require a maniacal focus on the customer experience, through the eyes of a merchant. The answer does not lie in data, but in the stores,” Schultz wrote on his LinkedIn account on Monday.


What Starbucks Should Focus On

Schultz suggests that the company should revamp its mobile ordering system and payment app to “once again make it the uplifting experience it was designed to be.”

A close-up of a Starbucks store in California.

Source: Mahavir Shah/Unsplash

These improvements could help maintain a positive customer experience, but it won’t be business as usual moving forward.


The Biggest Blow to Starbucks

One of the biggest blows Starbucks has taken this year was its strife with employees. In November 2023, Starbucks workers at hundreds of stores went on strike to protest the lack of their first contract with the company despite a nearly two-year organizing drive.

Several people hold signs at the protest for the Starbucks Workers United

Source: Reddit

This is the second time Starbucks workers have struck on Red Cup Day, one of the company’s biggest sales days.


The Great Irony of the Coffee Chain

“It’s not implausible to surmise that the occasional consumer or a consumer with less affinity for Starbucks, in general, might shift a couple of visits, at the margin, away from the brand if they found labor practices particularly distasteful,” Dunlop at MorningStar said to CBS News.

A customer pays by card after ordering from employee at Starbucks

Source: Depositphotos

“The great irony there, of course, is that Starbucks offers one of the best employee value propositions (wages and benefits) in the restaurant industry, so they’re being punished for labor practices that most folks partake in.”


Dissatisfaction Across the Board

The change in workers’ satisfaction has altered the atmosphere inside Starbucks, and customers are picking up on the shift.

Close-up view of an illuminated round Starbucks sign hanging outside a café, set against a dark background with soft focus on nearby trees

Source: Henry & Co./Unsplash

The pandemic also changed the community inside the stores, making them less of a communal place to sit and work or chat with close friends over a cup of customized coffee. Now, the entire experience feels downbeat and transactional.


Competition Is Increasing

Starbucks seems to be unaware of the competition it now faces. McDonald’s and other fast food brands are offering lattes and other simpler coffees at a lower price compared to Starbucks.

A woman smiling while holding a very large to-go coffee cup

Source: Freepik

For many people in the cities, local coffee shops offer better quality beverages for a similar price to Starbucks but provide a better atmosphere that customers appreciate.


The Future of Starbucks

While the former Starbucks CEO is right that the company needs to focus on improving the quality of the mobile app and customers’ ordering experiences, Starbucks also needs to refocus on the quality of workers’ and customers’ experiences in the store.

Employees working at a Starbucks Coffee location.

Source: Vaishnav Chogale/Unsplash

If people are spending nearly $10 on a drink and food order, then they should be getting the experience they want from the meal.