The Starbucks Fiasco - What Does The Future Hold for The World’s Largest Coffee Chain? (Part 2)

Since the beginning of the new millennium, Starbucks has faced its fair share of ups and downs. From rapidly expanding to new stores globally, opening drive thru locations, facing declining sales due to consumer boycotts and controversies to most recently experiencing a change in leadership with a new CEO, the company has been through an eventful journey.

By the mid 1990’s, Starbucks had firmly established its domestic dominance and was available in most major American cities and urban areas, leading them to plan for an international expansion. Their first target became the Japanese coffee consumer market, with Tokyo becoming the firm’s first international venture in 1996, the opening of their first international store. Starbucks entered international markets with a mix of wholly owned subsidiaries and joint ventures, choosing local partners who understood cultural nuances while managing the company’s overall strategic plan. This hybrid model enabled the company to maintain its brand consistency while localizing store formats and menu offerings where needed. In 1998, Starbucks entered the UK market through the acquisition of the 56-store Seattle Coffee Company, instantly gaining a large customer base in Europe. Although it faced fierce competition from local chains who already had built a base of loyal customers, the company still managed to take a significant share of the UK coffee market over time, and in terms of sales, Starbucks has nearly a 15% market share in the UK, even though Costa Coffee and Greggs (local UK coffee chains) have almost 5-10x the number of stores.

Within a few years, the company expanded into Asia, the Middle East, and Latin America, laying the groundwork for what would become one of the most recognizable and geographically diverse brands in the world. Throughout this rapid expansion, Starbucks’ core strength wasn’t just in operational execution but in emotional branding. Schultz’s vision was rooted in more than financial success; it was about cultivating an emotional bond with customers. Starbucks positioned itself as a values-driven brand — one that cared about people, planet, and purpose. It offered healthcare and stock options to part-time employees (called “partners”) well before this became a norm in corporate America. The company ensured its coffee beans were sourced through ethically certified producers, and made sure to invest in the training and wellbeing of their baristas to ensure a consistent customer experience. It wasn’t just a cup of coffee that Starbucks was selling, it was a lifestyle and a symbol of conscious capitalism, or at least that’s the image which they hoped to imprint in customers’ minds.

A significant turning point in the Starbucks journey came about during the 2008 financial crisis, which exposed deep vulnerabilities within the company. Sales declined rapidly during this period, and the company’s stock plummeted by over 50% between 2006 and 2008, forcing the firm to close over 600 underperforming stores nationwide. Schultz had to immediately find a way out of the mess his company was in and this led to him returning as the CEO of the company in 2008 in order to lead what he called a “Transformation Agenda.” He immediately halted expansion, launched a company-wide retraining of baristas to restore beverage quality, and introduced internal cost-cutting measures without sacrificing on the customer’s experience and ensuring that a standard for customer service was set and implemented across all their cafés. 

Indeed, one of the major factors that underpins Starbucks’ success not just within the U.S but across the globe is their commitment to innovation and a hassle-free customer experience, which was pioneered through the Starbucks loyalty rewards program and their mobile order service that allowed customers to place their order from the Starbucks app and pick it anytime they wanted from their nearest store. By the 2010s, Starbucks had shifted from a traditional retailer to a technology based, data-driven brand. The Starbucks Rewards mobile app, launched in 2009, was ahead of its time by integrating payment, rewards, and ordering into one seamless interface and over the last decade, mobile orders have accounted for over 25% of U.S. sales. Meanwhile, the introduction of drive-thru locations and self-serve kiosks at many cafés has allowed Starbucks to meet evolving consumer habits, particularly among urban and on-the-go customers.

Yet even as the company grew, it began facing challenges that went beyond its operations: critics started to raise questions about the company’s corporate values, labour practices, and social impact. As a brand associated with progressive values, Starbucks became held to a higher standard and has recently found itself in troubled waters. 

Most notably, Starbucks became the epicenter of a new wave of labour activism in the U.S. In late 2021, baristas at a store in New York voted to unionise, sparking a national movement. Since then, hundreds of Starbucks stores have filed for union elections, citing concerns over understaffing, inconsistent scheduling, stagnant wages, and burnout amongst employees. Despite branding itself as a socially conscious employer, the company has struggled to reconcile its progressive image with its anti-union stance. This reputational inconsistency has made it ideal for media scrutiny and public boycotts. 

In parallel, Starbucks has been caught in the crosshairs of global cultural and political tensions. It has faced boycotts in the Middle East and Muslim-majority countries over perceived Western affiliations and corporate silence on sensitive geopolitical issues. In 2023 and 2024, several pro-Palestinian movements called for boycotts of Starbucks over its legal disputes with unionised workers who expressed solidarity with Gaza. Although Starbucks has issued clarifications, the damage to its brand image has been quite significant in certain international markets.

Today, Starbucks stands as the largest global coffee chain with some significant internal challenges still present. A company that revolutionised coffee culture and the way most young, busy working adults consume coffee has its future hinged on its ability to balance profitability with ethical leadership, to innovate without alienating its workforce, and to remain relevant in a fragmented, values-driven consumer landscape. However, Starbucks must ensure that for its success to continue, the company will not just have to create high quality coffee products for its customers but also listen to what they have to say - that involves consumer trends and preferences, cultural and political viewpoints, and evolving with the technology of the 21st century.