Introduction
Starbucks is a global coffee company with operations in over 28,000 locations and headquarters in Seattle, Washington. The company’s retail locations offer a selection of hot and cold beverages. Since the end of 2019, COVID-19 has significantly impacted various businesses by altering the broad global economic environment and impeding everyday social interactions. It has posed challenging obstacles to the growth of the catering sector, including Starbucks.
Discussion
Starbucks is currently the dominant player in the struggling restaurant sector. Starbucks’ comparable sales growth in the third quarter matched expectations, even though they lagged behind their historical average in the year’s first two quarters. Additionally, throughout the year, its revenue has constantly increased remarkably. Starbucks has been consistently passing on cost hikes caused by salary and coffee price rises to its customers by capitalizing on consumer loyalty and a lack of consumer flexibility. The current financial crisis in the global economy is Starbucks’ most significant problem, forcing it to close many of its locations throughout the world.
Additionally, Starbucks’ poor advertising and marketing strategies limit its ability to expand. They prefer to market the drinks to clients cup by cup to develop their brand. The marketing doesn’t end until they’ve finished their coffee, lowering the likelihood of luring in worthwhile clients. Since they are worried about the quality of the coffee, Starbucks does not prioritize selling its products in supermarkets. This is because the coffee would be packaged in plastic bags.
The number of coffee brands in each country and the intense competition in the coffee industry have negatively impacted Starbucks in the market competition. For instance, Taiwan Shangdao coffee, Luckin coffee, and other brands are fierce rivals in the Chinese market (Liu, 2022). Starbucks will face a severe threat from several fast-food establishments that also compete in the market by offering cheap coffee. Moreover, Starbucks has incredibly rigorous criteria for raw materials, which directly increases the cost of its components and reduces its considerable earnings. Due to this, Starbucks must increase the price. Starbucks announced an increase in coffee pricing in February, which will cause a lot of consumer resentment and cause Starbucks to lose some of its customer base (Liu, 2022). In addition, the catering industry was most affected by the outbreak of COVID-19 since it was necessary to limit close contact. To respond to the significant changes brought on by the virus pandemic, Starbucks decided to close roughly 400 outlets and enable the new function “pickup” to place online orders on mobile devices (Liu, 2022). From a worldwide operations standpoint, Starbucks has not lost devoted customers in this pandemic, and more than half of Starbucks users are still making purchases.
The company’s dynamics during the pandemic were the partners’ and consumers’ health and well-being. However, despite the threats to the business, Starbucks was in a good position after carefully examining its significant issues and potential. Starbucks has created a complicated organizational structure supporting its continued growth and survival even in an increasingly crowded market. Starbucks is currently running with excellent efficacy despite the challenges of 2020, despite the need to periodically re-evaluate its core issues and essential prospects, especially in the coming few financial years (Lombardi et al., 2021). Starbucks has been expanding as a company for decades despite setbacks from the COVID-19 global pandemic, and the company has the deep roots to endure much past the current environmental conditions.
Conclusion
Therefore, Starbucks should keep selling its existing products and only slightly alter them, assuming that customers would keep buying their items at the same price range and that any price increases will be small (Lombardi et al., 2021). In other words, Starbucks took advantage of the chance to review its distribution and promotion choices to maximize its potential in the market after COVID-19.
References
Liu, X. (2022). Exploring the future value of Starbucks. Advances in Economics, Business and Management Research, 656, 793-800. Web.
Lombardi, C. V., Chidiac, N. T., & Record, B. C. (2021). Starbucks coffee corporation’s marketing response to the COVID-19 pandemic. Innovative Marketing, 17(2), 177-188. Web.