Starbucks' U.S. sales apparently took a big hit late last year

The coffee chain’s sales and traffic slowed from October through December, according to the research firm Earnest Insights, the latest evidence of a slowdown.
Starbucks HQ
Starbucks' U.S. sales slowed late last year. | Photo: Shutterstock.

Starbucks’ sales, average-ticket growth and transactions slowed down during the last three months of 2023, according to the data firm Earnest Insights.

The firm cited credit card data indicating that year-over-year sales growth decelerated from 11.1% in October to just 3.3% in December.

Transaction count, meanwhile, slowed from 3.3% growth in October to a decline of 1% in December. And the increase in average ticket slowed from 7.5% to 4.4% over that same time period. In short, the company is getting fewer customers and they’re spending less freely in the process.

It is the latest indication of weakness in the Seattle-based beverage chain’s biggest market, the United States. The foot traffic data firm in late November noted that traffic on the company’s “Red Cup Day” slowed down last year compared with previous years. J.P. Morgan analyst, meanwhile, reduced its projections for the chain’s sales that month, citing credit card data.

Deutsche Bank analyst Lauren Silberman is predicting the company will report a 5% U.S. same-store sales increase for the last three months of 2023, Starbucks’ fiscal first quarter. That would be the lowest for the company since 2019, not including the pandemic-influenced 2020.

She suggests that “idiosyncratic factors,” such as negative press and a social media backlash, have contributed to the problem.

Starbucks has increased its promotions in recent months to generate traffic, but bad weather in January was likely not much of a help. Starbucks is running a number of orders through its mobile app, such as $3 Thursdays and buy-one, get-one offers on weekends. 

Concerns about Starbucks’ sales direction have put some pressure on the company’s stock in recent months. The stock is down 13% since mid-November, when its per-share price hit $107.

The company has faced a social media backlash in the aftermath of the Israel-Palestine crisis, with vandalism at some of its cafes in the U.S. and elsewhere growing severe enough to prompt CEO Laxman Narasimhan to denounce violence in a letter to the system. The company has been subjected to calls for boycotts on both sides of the issue.

As for who is getting those customers, some of them appear to be going to the drive-thru coffee chain Dutch Bros, at least according to Earnest. The firm said that its “share of Starbucks customers’ wallets” was 6% in December, up from 4% three years earlier.

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