Does Starbucks have more uplink space? Howard: don't want to run a business with an aging customer base

This year has been a tumultuous year for Starbucks. Before interim CEO Howard Schultz returned, Starbucks had problems of varying degrees both internally and externally. Coupled with the impact of the epidemic on the economy, Starbucks shares have continued to decline since January this year.

Until April, when Howard Schultz returned as interim chief executive and made adjustments and changes to long-standing problems that had not been resolved in time, Starbucks shares have resumed their rise of about 25% since mid-June, slowly but steadily.

But despite all this, there are plenty of financial reports suggesting Starbucks remains one of Wall Street's worst-performing multinational restaurant chains this year. Just a few days ago (August 2 local time), Starbucks can notice in its fiscal third quarter report that although Starbucks began to raise product prices due to rising costs last year, sales in North America are still rising.

While the earnings report suggests Starbucks 'worst may be over, sales in China, its second-largest market, are down, and the U.S., its largest market, has plenty to work out.

Some U.S. industry analysts say that despite the recent rebound, given the uncertainty in many Starbucks stores, Starbucks 'continued upward potential remains limited, with management uncertainty, labor disputes and the direction of the epidemic continuing.

In order for Starbucks to have better development in the future, Howard has been visiting stores and baking factories in the United States since his return in April to learn about the sales and operation of offline stores. Although sales performance has increased, the problems of stores cannot be ignored.

For example, store design has not been able to adapt to the needs of current consumers, so it is impossible to retain customers through environment and service as much as possible, and it is unable to bring about changes in customer demand and attract more new and young customers after the epidemic.

So on his first day back, he stopped the stock buyback program and invested the money in partners. Then there was a reshuffle of some of the company's management and an attempt to weaken the unionization of the United States, but it is still in deep water and the problem has not been resolved satisfactorily by both sides.

This was followed by the announcement of the closure of all Starbucks stores for public use. Although it is still available to consumers, some consumers are more sensitive to spending in the current period of severe inflation problems, so although it is still available to customers who have spent money, many customers are dissatisfied with today's consumption experience, so many customers are lost.

But despite this, Howard still insists on closing the bathroom. Some media analysts say that Starbucks 'provision of restrooms may bring new customers, but it will not bring too many loyal customers. At the same time, many health and safety problems cannot be solved, so turning off can help Starbucks 'later development.

In addition to these, Howard said last month that he would reshape Starbucks 'corporate culture, saying that he would redefine the relationship between the company and employees, improve the benefits of store partners and provide new store experiences for customers. Howard has detailed plans for the "redefinition of partnerships" and others will be announced on September 13 this year.

With consumer demand for cold drinks now strong, Starbucks Beverage R & D has worked hard to develop more new cold drink innovations and will gradually update the equipment for making cold drinks in stores. Howard said he is very concerned about Starbucks 'relevance to young people, and changes in Starbucks' customer base are one of the indicators he pays attention to every year. It also says Starbucks doesn't want to run a business with an aging customer base, so it needs to change now.

Overall, Starbucks will continue to face a challenging operating environment, and its upside potential will be limited if it cannot solve current problems as quickly as possible.

Image source: InvestingPro

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