The CEO of Starbucks acknowledges the cruelty of the boycott economy

Brian Nicole, CEO, confirmed that the boycott campaign faced by Starbucks last year in the Middle East region had a significant impact on sales movement and company revenues.

This boycott was launched in the wake of widespread accusations of Starbucks of its support for Israel, which is waging a devastating war on the Gaza Strip, which Nicole described as “inaccurate and incorrect.”

In an interview with Bloomberg, Nicole stated, “We have not supported any military operations at all,” adding that the negative impact of the boycott campaigns was not only limited to the Middle East, but also extended to affect business in the United States.

It is noteworthy that Al -Shaya Company, the local partner of Starbucks in the region, was forced last year to lay off about two thousand employees because of what it described as “difficult market conditions”.

District campaigns background

The roots of the boycott campaign are due to accusations against Starbucks of supporting Israel, and not to take a pressure on it during its brutal war in Gaza.

This campaign was widely supported by consumers in the region, which led to a noticeable decrease in sales and customer movement inside stores.

Despite Starbucks attempts to respond to these accusations, the negative effects were clear on financial and administrative performance.

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Challenges in front of Starbucks

Nicole acknowledged that Starbucks face multiple challenges, most notably sales losses in the region, as well as other problems such as waiting periods in stores and high prices, which prompted some consumers to reduce their purchases.

Despite the ambitious plans to open 500 new stores and add 5 thousand jobs during the next five years – according to Nicole – the current challenges put Starbucks in a difficult situation, according to Bloomberg.

The American coffee chain revealed its 7% decreased sales during the period between July and September 2024, compared to the same period of the previous year, in light of the boycott campaigns.

Starbucks issued its financial statements for the last quarter of the past year, which starts in early July and ends on September 29, according to its own calendar.

The profits of the café company decreased to $ 909.3 million in its last quarter of 1.21 billion achieved in the corresponding quarter of the year before.

The sales of Starbucks stores in North America and the United States fell 6%, while it fell in international markets by 9% last year.

The sales of the café company in China witnessed a 14% decrease, according to the same data.

Starbucks revenues from July to September 2024 reached about 9.1 billion dollars, registering an annual decrease by 3.2%.

The Starbucks profit per share also decreased by 25% compared to the same period last year to 80 cents, and the company’s revenues and profits decreased below the market expectations.

Future plans amid crises

Nicole is trying to redirect Starbucks strategies towards international markets such as China and the Middle East to compensate for losses, stressing that the company’s future plans include a comprehensive review of the business structure and reduce administrative complexity.

But with these challenges, the question remains: Will Starbucks be able to restore consumer confidence in the Middle East?