Starbucks will close 150 company-operated stores in 2019, about three times its annual average. The coffee giant will also reduce the number of new licensed stores in 2019 by about 100 stores.
“Our recent performance does not reflect the potential of our exceptional brand and is not acceptable,” Starbucks CEO Kevin Johnson said in a statement.
Starbucks also reduced its third-quarter sales outlook, saying it projects an anemic 1 percent growth in same-store sales for the financial quarter ending September 30.
Frappuccino Sales Flop
To bolster sales, Starbucks plans to focus on developing “healthy” drinks, such as low-sugar iced tea as consumers increasingly flock toward healthier alternatives to high-calorie coffee drinks like its Frappucino, whose sales have dropped 3 percent this year.
During the past few quarters, Starbucks has made countless headlines for its social-justice initiatives. In January 2017, the company announced plans to hire 10,000 refugees.
The move angered some customers, who said Starbucks should hire unemployed American military veterans instead of prioritizing refugees from foreign countries. Some consumers launched a nationwide boycott after the announcement.
In May 2018, Starbucks closed 8,000 stores to provide mandatory “anti-bias training” to its 175,000 employees nationwide after two black men were arrested at a store in Philadelphia while waiting for a friend.
The men wanted to use the restroom without making a purchase — in defiance of a longstanding company policy — and refused to leave when a manager asked them to, USA Today reported. After the manager called the police, social media erupted into anger over the incident.
‘Anti-Bias Training’ Cost Millions Of Dollars In Lost Sales
Outgoing chairman Howard Schultz said the “anti-bias training” cost Starbucks “tens of millions” of dollars in lost revenue, but the company said that was not the reason for its weak sales.
“In this last quarter, we had an unplanned initiative related to the incident in Philadelphia that culminated in closing stores,” CEO Kevin Johnson said. “It is not an excuse…[but the closures] had an impact.”
Starbucks reacted to the uproar over the incident by announcing a change in policy that would allow anyone to use its restrooms and hang out in the coffee shop without making a purchase.
NBC’s Megyn Kelly questioned the new policy, saying allowing non-customers to sit in the stores all day and use its restrooms could cause Starbucks to become a haven for homeless people and diminish the shopping experience of its paying customers.
“There are places for the homeless,” Kelly said. “In New York City, they’re pretty good about providing churches for homeless to go and get meals and so on. There’s a question about whether a commercial establishment is that place. Do you really want to deal with a mass of homeless people or whoever is in there, they could be drug-addicted, you don’t know.”