Grabbed a Starbucks iced latte or Pink Drink lately and noticed the price seemed unusually low? That's because the coffee giant is now trying to lure customers back after a tough year, including via discounts and other promotions, reports the Wall Street Journal. The move is an atypical one for the premium brand, apparently necessitated by, among other things, an inflation-weary customer base. More:
- Price shifts: The Journal notes that some of Starbucks' offerings are going for half their usual price—for example, with a current buy-one-get-one deal, a grande coffee is now about $1.85 instead of the average $3.65. The chain is also offering $5 breakfast bundles, which it hasn't done in at least 10 years.
- Drivers: Starbucks says that, compared to the same time period last year, its US traffic fell 7% in the first three months of 2024, its largest quarterly plummet since 2010. It also lost about 1.5 million active loyalty-rewards customers in that same time frame.
- Other complaints: The New York Post notes that costs at Starbucks aren't the only thing causing customers to balk: Long lines are also a factor, with recent data showing that some devotees are waiting up to 40 minutes for their orders. "There are gripes about wait times, the standard of service, and the ambience of cafes," Neil Saunders, managing director of GlobalData, tells the Daily Mail. "To many, Starbucks feels somewhat less special than it once did." What Saunders feels about the price promotions: "It's basically an attempt to paper over the cracks."
- From a former CEO: Howard Schultz, who used to head the coffee chain, weighed in on Starbucks' dilemma last month, per Quartz. "The stores require a maniacal focus on the customer experience, through the eyes of a merchant," he wrote in a post on LinkedIn, adding that leadership needs to "spend more time with those who wear the green apron." But: "Starbucks will recover—of that, I am certain."
- Amazon initiative: Starbucks isn't the only retail giant trying to remain competitive on pricing. CNBC reports that Amazon is in the process of revamping its Alexa virtual assistant, including with a new AI boost—an announcement that comes on the heels of a May report that Amazon could start charging a monthly fee for premium AI services. "Amazon's pricing strategy for Alexa could help keep losses down, but it's too early to know if consumers will be willing to pay for it," says Jeff Marks of the outlet's Investing Club.
(Other retail giants such as
Target, Aldi, Walmart, and
McDonald's have lowered prices amid the backlash to high prices.)
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