Just over half of customers think Starbucks is affordable, well below its competitors. | Photo: Shutterstock.
Maybe Starbucks is just too expensive.
According to Technomic, a sister company of Restaurant Business, the Seattle-based coffee shop giant lags behind—badly—on this question: Is the restaurant affordable?
Fifty-one percent of customers said they either agreed or strongly agreed that the chain was affordable. That was the lowest among the seven largest coffee shop chains, by some 1,500 basis points.
Caribou was next lowest at 66%. At the top was Tim Hortons at 79%, followed by Dunkin’ at 74%.
Affordability has come into focus in the restaurant space lately as consumers cut back on their visits to fast-food restaurants. Many consumers have complained on social media and elsewhere about prices at quick-service.
Nearly 80% of Americans now consider fast food a “luxury,” according to Lending Tree. Consumers now view casual-dining restaurants to be a better value, according to the survey firm YouGov.
Starbucks had long been above that, at least to some extent, as the chain’s customers were more concerned about getting their caffeine fix on their way to work than they were about how much they were spending.
Starbucks customers generally have higher incomes, and they’ve clearly been less concerned about price as they spent extra to customize their beverages, to the tune that modifiers are now a $1 billion-a-year business for the chain.
But then the chain’s sales turned south in November and stayed there, falling in each of the past two quarters for the first time since the pandemic. The result ultimately led the company to oust CEO Laxman Narasimhan and replace him with Brian Niccol, the now-former CEO of Chipotle Mexican Grill.
Starbucks did take one step to address its affordability issue with a “Pairings” menu with either a croissant or a sandwich and a small coffee for $5 to $7, all before Narasimhan left.
Niccol in his early plan for Starbucks U.S. didn’t specifically address the issue of affordability. He instead spent most of the time talking about operations. “It can feel transactional, menus can feel overwhelming, product is inconsistent, the wait too long or the handoff too hectic,” Niccol wrote.
Yet if a chain is considered unaffordable, and not delivering on its promise to customers, that could spell weak results. And given that the chain has been attracting more younger customers, for whom affordability may be a chief concern, the data could help explain its sales problems this year.
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