Starbucks customers no longer want to wait 20 minutes to get a coffee
- Starbucks is known for its high prices, but the company claims it offers value
- But the CEO admitted that slow service means lost customers
- Starbucks boycotts, bad weather and customer cutbacks also play a role
Starbucks has had a disastrous start to the year, with tens of millions of customers going to competitors instead or staying home.
Tim Horton’s, McDonald’s and Dunkin Donuts have all taken market share from Starbucks in hot and cold drinks and food.
The company this week reported a drop in sales for the first time in almost three years, coming at the height of the pandemic. It wasn’t until November that it reported record revenues.
Several factors are to blame β including high prices, customers cutting back on spending and bad weather β but the slow service was highlighted by Starbucks’ CEO.
Starbucks’ growth is due to complicated and customizable drinks like Frappuccinos in the summer or Pumpkin Spice Lattes in the fall, but they can all take baristas minutes to make.
Starbucks lost millions of customers in the first three months of the year
Statbucks CEO Laxman Narasimhan said the slow service is putting off customers
Starbucks customers are abandoning orders while waiting in line because it’s taking too long
Starbucks β which has about 17,000 stores in North America β also warned investors on Tuesday that sales would remain sluggish in the spring and summer.
A slew of factors have been blamed for the unexpected sales slowdown and have since been brought to attention β by stock analysts, CNBC’s Jim Cramer and the company itself.
These also include boycotts of the Israel-linked brand and competition from rivals.
As for slow service, the company said it has seen millions of examples of customers ordering items but then abandoning their drinks because it took a long time.
βWe have customers today who come to our stores, or pay for their orders via mobile, who are not completing their transaction due to wait times,β CEO Laxman Narasimhan said in an interview with CNBC’s Jim Cramer this morning.
“Our team in the US has done a phenomenal job improving the speed of service, but we see more opportunity there.”
Customers have complained about the wait times on social media. On TikTok, mikeylorenz0 complained he has to wait ’20 minutes’ for a black coffee while others order a ‘venti iced grande sugar caramel marshmallow ugat’.
He called for an express line for people who only want basic drinks, such as black coffee or latte, without modifications.
Shares of Starbucks hit a two-year low after the company’s poor first-quarter results were announced Wednesday evening. Narasimhan went to CNBC to defend the company, but was shut down by Cramer.
The CEO told CNBC that the quarter was also poor due to bad weather in the US and sluggish demand in China, its second-largest market.
Price rises in cafes and restaurants last year forced customers to drop them and instead drink more coffee or eat lunch at home, hurting business for chains like Starbucks.
But rivals like Tim Horton’s, McDonald’s and Dunkin Donuts didn’t face the same problems, CNBC’s Jim Cramer said.
On TikTok, mikeylorenz0 complained about having to ‘wait 20 minutes’ for a black coffee, while others ordered a ‘venti iced grande sugar caramel marshmallow ugat’. He called for an express line for people who only want basic drinks, such as black coffee or latte, without modifications.
Starbucks in Atlanta, Georgia, with a long line of cars at the drive-thru
All three have recently said they are taking market share from Starbucks.
During a post-earnings call on Wednesday, Narasimhan spoke to investors about the reasons for the poor sales.
βMany customers are more demanding about where and how they spend their money, especially now that stimulus savings are largely being spent,β he said.
“We saw this become a reality this quarter as customers made the trade-off between eating out and eating at home.”