Sadness at Starbucks

The Siren Weeps

Once upon a time, Starbucks was the gilded temple of caffeine, where you willingly forked over $7 for a latte that required a second mortgage for soy milk. Now? The crown is slipping, the foam is flat, and the mermaid is starting to look more like she’s drowning in her own tears. For the past several years, the company has been sliding from “beloved third place” into “an airport-only desperation stop.” Six straight quarters of same-store sales declines. U.S. foot traffic down 10% year-over-year. And international growth? Let’s just say it’s been about as inspiring as their seasonal pastries: fine to look at, disappointing once you bite in. You get it.

Remember when Starbucks was warm, bustling, and vaguely smelled like ambition mixed with  espresso? Then came the bright idea: pivot to pickup-only and mobile-order-only stores. Translation: remove the cozy chairs, banish the human interaction, and transform your neighborhood café into a glorified vending machine. It flopped. Hard. Turns out, people didn’t want to pick up their lukewarm flat white from a sterile counter that looked like the set of a dystopian “Black Mirror” episode. Starbucks is now spending millions to undo its own bad idea, either closing them down or converting many of those soulless boxes back into actual cafés with seating and where you see, brace yourself, people.

Add to that the growing unionization movement — over 11,000 workers across 500 U.S. stores have unionized. This might not seem catastrophic until you realize Starbucks has been fighting them with all the warmth of a December iced Americano. It’s not going well. Then there was the 2023 boycott over a union social media post that cost the company $11 billion in market value practically overnight. Its amazing what purple haired, tattooed She/Them/He’s can do when they set their mind to it. And because the optics weren’t already bad enough, new CEO Brian Niccol (yes, the Chipotle guy) decided to keep his residence in Newport Beach and commute by private jet from California to Seattle, while (rightly so) demanding a return to the office for hundreds of corporate staff.  Nothing says “relatable coffeehouse culture” quite like flying to work on a Gulfstream.

Margins have taken a macchiato-sized hit. North American operating income dropped from $1.1 billion to $748 million in just a year. Margins? Down from 18% to 11.6%. The company is pouring half a billion dollars into staffing, training, and something called “Green Apron Service”, which sounds like a farm-to-table salad chain but is a back-to-basics hospitality push. Hello, good morning, here… let me write that on your cup. Ok.

Niccol’s big comeback strategy is basically Starbucks admitting it needs to be Starbucks again. More seating. More baristas. Simpler menus. The so-called “coffeehouse of the future” will have drive-thrus, cozy corners, and actual human smiles. Revolutionary or so 1990’s? There are faint glimmers of hope: U.S. transactions have shown improvement for three straight quarters, and Q3 FY2025 net revenues rose 4% to $9.5 billion. But profits are still under pressure thanks to all that reinvestment. It’s like trying to patch a leaky espresso machine — you can fix it, but it’s going to get messy and expensive first.

Meanwhile, in coffee land…

While Starbucks tries to remember what made it special, Dunkin’ is quietly thriving in its own low-rent way. No one goes to Dunkin’ for an “experience.” You go because it’s cheap, fast, and the caffeine hits your bloodstream before you’ve even pulled out of the parking lot. You know you shouldn’t eat all your kids munchkins but you do anyway.  Even if their coffee tastes like it was brewed in a 1987 break room, it’s reliable. You can still walk in and get a ‘howyadoooin” from the landscaper in line. And in this economy, reliable and friendly beats “pumpkin spice cold brew with foam art” every day of the week.

And then there’s Luckin Coffee,  Starbucks’ biggest nightmare wrapped in a paper cup. This Chinese chain was supposed to be a cautionary tale after its spectacular 2020 fraud scandal. Instead, it pulled a full Lazarus act and came back caffeinated, tech-savvy, and ready to eat Starbucks’ lunch. Luckin has now overtaken Starbucks as China’s largest coffee chain, selling more cups in a single quarter than Starbucks does in months. How? By going full tech integration: app-only ordering, lightning-fast delivery, constant discounts, and partnerships with everyone from Alibaba to convenience store chains. It’s less “coffeehouse culture” and more “caffeine logistics empire.” Never heard of Luckin? Well, with 26,000 locations in Asia, they have landed at JFK and now have two outlets in Manhattan with more on the way. Where Starbucks charges you extra for oat milk like it’s liquid truffle oil, Luckin’s lattes often come in at $3, and they arrive at your office in 15 minutes with no barista guilt-trip about not tipping. They’ve also mastered the hyper-local menu game: cheese-topped lattes in Chengdu, coconut milk drinks in Shenzhen, seasonal flavors that actually reflect local tastes rather than whatever’s trending on TikTok in Seattle. Starbucks saw Asia as its new frontier for sales growth and a bottom line shot, but now Starbucks solidly behind. Luckin sells convenience, speed, and price to a generation that thinks coffee is just another daily utility. In other words, Starbucks is offering a cozy library in a world that wants an Amazon Prime button for caffeine.

Starbucks used to be shorthand for “I’m a cosmopolitan professional with good taste and no time.” Now it’s veering toward “I’m willing to overpay for burnt espresso because it’s on my way.” The mystique has faded. The brand that once inspired people to learn an entirely new coffee dialect (“triple venti soy no foam half-caf latte”) is now just one more chain trying to claw back relevance in a sea of brown liquid.

Yes, Starbucks can recover…the pieces are there, the brand recognition, the global footprint, the talent pool of genuinely great baristas are in house. But until it figures out whether it’s a high-touch neighborhood café or a glorified caffeine ATM, it risks being beaten on value by Dunkin’ and on efficiency by Luckin.

CEO Niccol is going to need to ditch the private jet, scrap the soulless store concepts, and maybe, just maybe, stop charging 80-cents for oat milk like it’s a rare Tuscan vintage.