Starbucks’ stock shot up more than 22% on Tuesday, Aug. 13, when the company announced it is swapping out CEOs. Laxman Narasimhan is out effective immediately, while the coffee giant poached Chipotle CEO Brian Niccol to turn things around like he did for the burrito business.
Niccol has been CEO of Chipotle since 2018. He will take over at Starbucks on Sept. 9.
Less than two years ago, Starbucks thought it had the right person for the job in Narasimhan, who took over for longtime CEO and Chairman Howard Schultz in March 2023.
“It’s a great day for Starbucks,” Schultz said when they announced Narasimhan in 2022, several months before he was set to take the reins. “I feel like we have a No. 1 draft choice.”
But sometimes first-rounders do not pan out. In the 17 months Narasimhan led Starbucks, the stock dropped nearly 23%.
By comparison, over the same time, Niccol and Chipotle saw the company share price rise more than 73%. Under Niccol’s tutelage, Chipotle’s stock soared more than 700% since 2018.
On news it was losing its CEO, Chipotle was down more than 12% Tuesday morning. COO Scott Boatwright was named interim CEO.
What’s souring Starbucks?
Starbucks has been struggling with store sales in and out of the U.S. Traffic and sales are huge disappointments in the U.S. and China. For both countries, customers seem to be gravitating toward cheaper options.
After a big earnings miss, Schultz, who is no longer officially affiliated with the company, wrote in an open letter.
“I have emphasized that the company’s fix needs to begin at home: U.S. operations are the primary reason for the company’s fall from grace,” Schultz wrote. “The stores require a maniacal focus on the customer experience, through the eyes of a merchant. The answer does not lie in data, but in the stores.“
Just a couple of weeks ago, Brian Niccol spoke with CNBC about how Chipotle was increasing growth while other companies lost customers to the value-meal route.
“And that’s really a testament to our operators executing great throughout, our restaurants being staffed correctly, being deployed correctly,” Niccol said. “And then our marketing really hit with some terrific menu news around chicken al pastor. The value proposition of Chipotle really hinges on great culinary: Providing great customization with terrific speed. And one of our key equities is these generous portions we provide. And I think our teams have done a fabulous job of doing that.”
Can Niccol right the ship?
Niccol is no stranger to turning a ship around. He is credited with Chipotle’s rise from disgrace.
After years of bad press over foodborne illness, former Taco Bell CEO Niccol took charge of Chipotle in 2018. The stock has far outperformed the market during that time as Niccol steered the company past E. coli, the pandemic and inflation.
If there is a question mark in the Niccol hire for Starbucks, it is his lack of recent experience in China. Chipotle is barely an international player and not present in China, while China is Starbucks’ second-biggest market.
But if Starbucks’ board is taking Schultz’s advice to heart that domestic operations is where the problem starts, his resume is as stuffed as a Chipotle burrito on a good day.
It’s ‘Augtober’ and pumpkin spice is making an early comeback
Happy “Augtober!” In case you don’t know what that is — it means the beginning of pumpkin spice season. Despite still dealing with August’s sweltering summer temperatures, more and more businesses are starting to roll out their fall favorites like it’s October.
For example, Krispy Kreme has already started selling its pumpkin spice lattes and donuts. And while Starbucks — the OG of pumpkin spice lattes — hasn’t added them back to its menu yet, it tends to do it around the last week of August, historically.
Dunkin’ has also been dropping its fall menu earlier in August each year. Last year, America was running on its pumpkin spice by Aug. 16.
For something a little more substantial, customers will have to wait a little longer. IHOP drops its pumpkin spiced menu on Sept. 1.
Nielsen data shows Americans spend more than $500 million on pumpkin spice products each year.
The popular season comes amid a particularly tense financial environment, as unemployment soars, high prices persist, and budget-conscious consumers pull away from fast food. It remains to be seen if getting a jump on the fall season will lead to higher overall profits or just spread them out more thinly over time.
White Castle becomes latest restaurant to join value meal wars
White Castle is latest chain to join the value meal wars as restaurants try to attract inflation-worried customers who might be thinking of dining at other places or just staying at home. The company has cut the cost of its burgers by more than 30%.
For a limited time, the Ohio-based chain is selling shareable sacks of 10 cheese sliders for $7.99 — that’s less than 80 cents per burger. The last time White Castle burgers were available for that price was in 2011.
“Customers are making leftovers last longer as food prices have gone up,” White Castle Vice President Jamie Richardson told The New York Post. “We are known for value. We are leaning into it more now.”
White Castle is flipping prices at its 335 stores to compete with the competition, including its larger rivals like McDonald’s, Burger King and Taco Bell who each have unveiled a value meal of their own.
As McDonald’s fought back against what it called “inaccurate” reporting about its pricing earlier this year, the fast-food giant introduced its $5 value meal. The meal includes a choice of a McChicken or McDouble, and four-piece Chicken McNugget, small fries and a small drink.
The deal is staying around through August, which is longer than originally planned. In an internal memo obtained by multiple news outlets, McDonald’s executives wrote, “When our customers are ordering the $5 Meal Deal, they aren’t visiting the competition, and early performance shows this deal is meeting the objective of driving guests back to our restaurants.”
The competition is also bringing on the value. Burger King’s $5 Your Way meal offers three different sandwich options, Taco Bell’s Luxe Cravings Box includes two different types of tacos, a burrito and more for $7. Starbucks’ Pairing Menu gives customers the option of buying a drink and a breakfast item for $5 or $6.
Other chains like Wendy’s, Popeyes, Jack in the Box and Sonic have all launched new deals. But these companies now not only have to compete with each other but also with restaurants from outside the fast-food space.
Fast casual chains like Applebee’s and Chili’s have called out their fast-food rivals, even in their commercials. These restaurants, no matter the category, are all trying to hold onto their place in the dinner conversation of cost-conscious Americans.
Hamas leader reportedly killed in Iran amid rising tensions in Middle East
A Hamas leader is reportedly assassinated in Iran as developments in the Middle East raise concerns of conflict escalating in the region. And Vice President Kamala Harris is closer to naming her running mate with plans of holding their first rally in a matter of days. These stories and more highlight The Morning Rundown for Wednesday, July 31, 2024.
Hamas leader reportedly killed in Iran amid rising tensions in Middle East
Major developments in the Middle East, with reports of a top Hamas leader being killed in Iran on the same day Israel struck Lebanon’s capitol and killed a Hezbollah commander. The U.S. also carried out a strike in Iraq in what U.S. officials are calling a move of self-defense.
According to state media, Iran’s president said the country “will defend its territory and make those responsible regret their actions.” Fears of an all-out regional conflict have also been renewed with the Hamas leader’s death happening on Iranian soil.
Tensions are also growing in Iraq as the U.S. said it carried out a strike against a base in Baghdad used by Iraqi forces, killing four Iraqi fighters. The U.S. said the move was in self-defense, telling Reuters those militants were looking to launch drones and posed a threat to the U.S.
Some global media outlets are also reporting hopes of any ceasefire hostage deal between Israel and Hamas are looking slim to none given the escalations happening within the past 24 hours.
Kamala Harris to hold rally with vice president pick in Philadelphia next week
Vice President Kamala Harris is expected to announce her running mate pick on Monday, August 5, as she looks to win the presidency. Then, on Tuesday, August 6, she’s expected to hold a rally in Philadelphia with her new running mate joining her on stage.
The campaign trail is heating up, with Harris holding her largest rally yet in Atlanta, Georgia on Tuesday, July 30.
Both the Harris and Trump campaigns also released new political ads attacking the records of their opponent. And both are on the road to more events to rally their supporters.
This race will be among a handful that determine who controls the U.S. Senate this fall. Currently, the Senate is controlled by Democrats while the House is controlled by Republicans, both with slim majorities.
Riots over Venezuela’s presidential election continue
Authoritarian President Nicolás Maduro accused opposition leader María Corina Machado and presidential candidate Edmundo González of “criminal violence,” and a close ally is calling for their arrests.
Protesters are demanding Maduro make voting data from Sunday’s, July 28, election public. Venezuela’s opposition and multiple Latin American leaders are refusing to recognize Maduro’s victory.
Machado said on Monday, July 30, the country’s opposition had about 73% of the voting tallies from Sunday’s election, proving Maduro did not win.
The national electoral authority has proclaimed Maduro the winner, giving him a third term in office and extending 25 years of socialist party rule.
Boar’s Head recall expanded to include 7 million more pounds of deli meats
Boar’s Head, a company known for deli meats, is recalling an extra 7 million pounds of its products. This is because there’s an outbreak of listeria, a dangerous bacteria, that has been linked to two deaths and made dozens of people very sick in 13 states.
The recall includes various types of meats like liverwurst, ham and salami made at their Virginia plant and have sell-by dates ranging from July 29 to Oct. 17. This recall adds to an earlier one of more than 200,000 pounds of similar products.
The issue was first noticed when a liverwurst sample from Maryland tested positive for listeria. Further tests confirmed that this same listeria strain was making people sick.
Starbucks sales down as prices go up
For the second quarter in a row, Starbucks’ sales have slumped as prices continue to rise. In its latest earnings report, Starbucks’ sales dropped 3% globally and 2% in North America.
Total transactions at North American stores fell by 6%, but higher prices shorten the gap between sales and revenue as coffee chains and restaurants alike continue to struggle with bringing customers in amid high prices.
Simone Biles leads U.S. Women’s gymnastics team to gold medal
After dropping out of the women’s gymnastics team event in Tokyo three years ago and taking time to focus on her mental health, Simone Biles returned to the same event on Tuesday, July 30, in Paris. This time she led Team USA to the gold.
Biles, along with Suni Lee, Jordan Chiles and Jade Carey, won by more than five points. Italy took home the silver medal and Brazil won bronze.
With the victory, Biles becomes the most decorated U.S. gymnast in history, with eight medals.
And she’s not done yet. Biles will compete in four more individual events including the all-around final on Thursday, Aug. 1, where she’ll have a chance to add more gold to her historic record.
Jury deliberations to resume in Hunter Biden’s federal gun trial
Jury deliberations are set to resume in Hunter Biden’s federal gun trial. And Apple finally takes a big step into the world of artificial intelligence with “Apple Intelligence.” These stories and more highlight The Morning Rundown for Tuesday, June 11, 2024.
Day 2 of jury deliberations in Hunter Biden’s federal gun trial
Jury deliberations will resume Tuesday, June 11, in the federal gun trial of Hunter Biden. Deliberations started on Monday, June 10, after both the prosecution and defense rested their cases. Jurors only deliberated for less than an hour before being sent home for the day.
The jurors will decide whether Hunter Biden is guilty of three felony charges linked to purchasing a gun in 2018, when he was reportedly addicted to drugs.
In closing arguments, the prosecution urged jurors to “use common sense” to find the president’s son guilty, adding “no one is above the law.” The defense, however, said the prosecution failed to prove Hunter Biden was using illegal drugs when he bought the gun — claiming there were “gaping holes” in the case.
Hunter Biden has pleaded not guilty to all charges. If convicted, he faces up to 25 years in prison.
Blinken in Israel; U.N. Security Council endorses cease-fire plan
U.S. Secretary of State Antony Blinken continues to urge top Israeli officials to accept and implement a plan for post-war Gaza, meeting with Israeli opposition leader Yair Lapid in Tel Aviv Tuesday, June 11. This come as he also pushes for more international pressure on Hamas to agree to a cease-fire proposal just endorsed by the United Nations Security Council.
On Monday, June 10, 14 of the U.N.’s 15 security council members voted in favor of endorsing the cease-fire plan to end the ongoing war between Israel and Hamas that was announced by President Joe Biden in May. Only Russia abstained from voting.
The U.S. said Israel has already accepted the cease-fire proposal.
The resolution calls on Hamas to agree to the three-phase plan, which would see an initial six-week cease-fire and the exchange of some Israeli hostages being held by Hamas in Gaza for Palestinian prisoners in Israeli jails.
The second phase would include a permanent cease-fire and the release of the remaining hostages. The third phase would involve a reconstruction effort for the devastated Gaza strip.
Hamas was quick to welcome the resolution, saying in a statement it’s ready to cooperate with mediators and enter “indirect negotiations” over the implementation of the principles of the agreement.
Port of Baltimore shipping channel fully reopens after bridge collapse
After being closed for more than two months, the Port of Baltimore’s shipping channel is fully operational again. In late March, a massive 213-million pound cargo ship crashed into a support column of the Francis Scott Key Bridge, killing six construction workers and causing the structure to collapse — cutting off access to the crucial shipping artery.
To fully reopen the 700-foot-wide channel, crews had to remove roughly 50,000 tons of wreckage from the Patapsco River, according to the Army Corps of Engineers.
The work to rebuild the nearly 50-year-old bridge continues. Shortly after the collapse, President Biden pledged the federal government would help pay for it.
Note: The above has been corrected to say 213-million pounds. An earlier version omitted million.
FDA panel backs Eli Lilly drug that slows Alzheimer’s progression
A panel of Food and Drug Administration (FDA) advisers is unanimously backing an Alzheimer’s drug from Eli Lilly that’s been shown to slow the disease’s progression. The drug works by helping the body remove amyloid plaque buildups in the brain, which are a hallmark of Alzheimer’s disease.
These plaques are harmful deposits that can form in the brain as people age. Removing the plaque seems to slow down the brain changes that seem to happen with Alzheimer’s.
The FDA will make a final decision on approval later this year.
If approved, Eli Lilly’s drug would become the second Alzheimer’s medication of its kind currently on the U.S. market, expanding treatment options for the more than 6 million Americans who have the disease.
Alzheimer’s is the fifth leading cause of death for adults over 65 years old.
Apple unveils its AI strategy, partnership with OpenAI
Apple held its annual Worldwide Developers Conference on Monday, June 10, where it announced new upgrades to its devices and operating systems. But what’s getting the most attention is Apple Intelligence, the tech company’s new strategy for incorporating AI into its business model.
“Recent developments in generative intelligence and large language models offer powerful capabilities that provide the opportunity to take the experience of using Apple products to new heights,” CEO Tim Cook said. “So, as we look to build in these incredible new capabilities, we want to ensure that the outcome reflects the principles at the core of our products.”
Among its capabilities, Apple Intelligence will see an update to the voice assistant Siri. Apple said Siri will now better understand your questions and, like with other chatbots, people will also be able to type to Siri.
Apple also announced a partnership with OpenAI Monday, saying if Siri doesn’t know the answer to something, it will ask if it can take your question to ChatGPT.
New writing tools will see Apple Intelligence proofread, rewrite and summarize text across various apps, as well as suggest the right tone for the message.
Apple said people will also be able to create your own custom emojis just by describing what you are looking for. They’re calling these “genmojis.”
Apple Intelligence is set to launch in the fall.
Starbucks launches its own production studio
When you think of Hollywood production studios, you might think of Warner Brothers, Paramount Pictures or Disney. But a new name is now joining the list: Starbucks.
The coffee chain announced the creation of Starbucks Studios, which it said will “produce original entertainment and tell stories that deepen connections and spark conversations.”
Starbucks is partnering with Oscar-winning producer Michael Sugar and his media company Sugar23.
Starbucks is the latest company to open its own production studio, following brands like Nike and Mailchimp.
Starbucks and Workers United begin collective bargaining talks
After two and a half years, Starbucks and Workers United have reached an agreement to start negotiations for collective bargaining agreements, covering nearly 400 unionized stores. The coffee chain and the union have committed to initiating discussions on a “foundational framework” that guarantees a fair organizing process for workers.
Both parties describe this agreement as a “constructive path forward.”
In December, Starbucks announced it would resume bargaining talks with Workers United, aiming to repair its relationship with some employees. “As a sign of good faith, Starbucks has agreed to provide partners represented by Workers United with the May 2022 benefits, including credit card tipping,” the company stated.
In November, thousands of Starbucks employees from numerous stores staged a strike, demanding their first contract after almost two years of organizing efforts. Despite the first store voting to unionize in December 2021, Starbucks has vigorously contested the unionization efforts.
The National Labor Relations Board has accused the company of illegal actions in certain instances. Starbucks has denied any wrongdoing and accused the union of infringing on its trademark by using the company’s green logo for its branding, alleging that it encouraged employees to break company policies.
Starbucks is aiming to conclude contract negotiations by the end of the year.
President Biden and former President Trump win in Michigan as a group of Democratic voters use the primary to send a message. And wildfires in the Texas Panhandle result in the shutdown of a nuclear weapons facility. These stories and more highlight The Morning Rundown for Wednesday, Feb. 28, 2024.
Biden dominated the Democratic primary, capturing 81 percent of the votes. However, a notable 13 percent of Democratic voters opted for the “uncommitted” choice, signaling dissent primarily over the president’s approach to the Israel-Hamas conflict in Gaza. The “Listen to Michigan” movement, advocating for a cease-fire in the war, has highlighted this dissent. Michigan’s significant Arab-American community, the largest in the United States, played a pivotal role in this protest vote.
On the Republican side, Trump continued his winning streak in the early state primaries, claiming 68 percent of Michigan’s GOP votes. Nikki Haley, the former U.N. ambassador, finished in second place with 26 percent of the vote. Despite not securing a primary win thus far, Haley has announced her intention to stay in the race at least through the upcoming Super Tuesday.
Michigan’s Republican Party allocated only 16 of its 55 delegates based on Tuesday’s primary results. The remaining delegates will be determined at a GOP convention set for Saturday, adding another layer of anticipation to the state’s political landscape.
Biden hosts Congressional leaders to discuss government shutdown, Ukraine
Following a meeting with President Joe Biden at the White House on Tuesday, congressional leaders expressed optimism about averting a looming government shutdown.
The gathering included House Speaker Mike Johnson, Senate Majority Leader Chuck Schumer, House Minority Leader Hakeem Jeffries, Senate Minority Leader Mitch McConnell, and Vice President Kamala Harris.
After the meeting, Schumer spoke to reporters, emphasizing the productive nature of the discussions. “Productive meeting on the government shutdown. We are making good progress. The speaker said unequivocally he wants to avoid a government shutdown. We made it clear that that means not letting any of the government appropriations bills lapse,” Schumer stated.
In addition to strategies for preventing the shutdown by Friday’s deadline, the leaders also delved into the stalled additional aid to Ukraine. Schumer described these talks as “intense,” noting that leaders from both parties urged Speaker Johnson to pass the Senate’s bipartisan funding bill for Ukraine.
Johnson told reporters that the House is actively exploring all options for the bill but emphasized that securing the nation’s border is the top priority.
U.S. announces $53 million in additional aid for Gaza
The United States has announced an additional $53 million in humanitarian aid for the people of Gaza and the West Bank amid the ongoing conflict between Israel and Hamas.
The bulk of the aid will support food assistance, addressing the critical situation in Gaza where two million people are at “imminent risk” of famine, according to the US Agency for International Development.
Concerns have been raised by US officials over the reduced number of trucks entering Gaza. Last week, only 85 trucks a day made it through the Rafah crossing, a significant decrease from the 500 trucks per day before the conflict began.
White House officials stated that this new aid package increases the total U.S. assistance to Gaza during the conflict to $180 million.
Wildfires sweeping through the Texas Panhandle have prompted evacuations and power outages for thousands, impacting residences and prompting a temporary shutdown of a nuclear weapons facility. Officials announced this morning that the facility would reopen as usual.
The fires, fueled by strong winds, have caused damage to an unspecified number of homes. Governor Greg Abbott has issued a disaster declaration for 60 counties in response to the crisis.
The Texas A&M Forest Service reported responding to 13 wildfires on Monday, noting that Tuesday’s conditions were prime for increased wildfire activity.
Since Monday, over 40 houses in Fritch, a city spanning Hutchinson and Moore counties, have sustained damage, according to city officials. Evacuations have been ordered for parts of the city.
Authorities are currently investigating the cause of the wildfires.
Starbucks and Workers United Union agree on ‘path forward’
The coffee chain and the union have committed to initiating discussions on a “foundational framework” that guarantees a fair organizing process for workers. Both parties describe this agreement as a “constructive path forward.”
“As a sign of good faith, Starbucks has agreed to provide partners represented by Workers United with the May 2022 benefits, including credit card tipping,” the company stated.
Starbucks is aiming to conclude contract negotiations by the end of the year.
Apple cancels plans for self-driving electric car
Apple is putting plans for a self-driving electric car, moving Project Titan in the rear-view mirror.
As Bloomberg first reported, Apple is discontinuing its secretive, decade-long initiative aimed at competing with Tesla, known as Project Titan. Employees from the company’s Special Projects Group will be reassigned to other departments, including the Artificial Intelligence division.
According to Bloomberg, Apple’s Chief Operating Officer Jeff Williams and Kevin Lynch, a vice president overseeing the project, have notified employees about the discontinuation of the project. The report also mentions potential layoffs, although the exact number of employees affected remains unclear.
Despite reportedly investing billions of dollars in research to develop the car, Apple never officially confirmed its existence. The company has yet to comment on these recent reports.
Activists at 25 universities aim to boot Starbucks, allege anti-union practices
Starbucks is facing scrutiny from pro-union activists across 25 U.S. college campuses, according to The Guardian. On Thursday, Feb. 22, student organizers are reportedly calling for universities, including the University of Chicago, Georgetown University, and Rutgers, to cancel contracts with Starbucks shops on campus.
The Guardian reports that union advocates will be holding petition drives in an effort to hold Starbucks accountable for its labor practices and support union organizing efforts at locations across the U.S.
The demands by union leaders come as some unionized workers accuse Starbucks of “union-busting tactics.” Starbucks has denied the accusations, telling The Guardian it remains committed to “our stated aim of reaching ratified contracts for U.S. union-represented stores in 2024.”
According to The Guardian, around 400 Starbucks stores in the U.S. have won unionized elections to join Starbucks Workers United Union since 2021.
The New York Times reports that union leaders are requesting a minimum wage of up to $20 per hour with annual raises and “fair and consistent scheduling.” Workers interviewed by The New York Times said Starbucks executives often tout the benefits the company provides but rarely reach the minimum of 20 hours to qualify for benefits.
Fox Business reports that in June, a federal administrative judge for the National Labor Relations Board found that Starbucks committed “egregious and widespread misconduct in violation of federal labor laws as unionization efforts at stores in New York took place.” According to Fox Business, accusations against Starbucks included spying and threats against those involved in union organizing efforts.
The federal administrative judge ordered Starbucks to cease and desist from actions that violate employees’ rights to organize and to reinstate seven terminated employees, as well as pay financial restitution to 27 other employees.
A Starbucks spokesperson reportedly found the ruling “inappropriate” and said that Starbucks is seeking a legal review of the ruling.
The New York Times also reports that Starbucks faces accusations of shuttering unionized stores, which the company denies, blaming other factors such as crime for the closure of the stores.
In December, according to Reuters, a third-party inquiry found that Starbucks did not use anti-union practices during its contract negotiations with unionized employees.
Starbucks Workers United told Reuters that the report “acknowledges deep problems” with the company’s response to unionization.
The Guardian reports that no store has had its unionization votes ratified by Starbucks to date.
US restaurant chains feeling impact of Middle East war, protests
Major U.S. restaurant chains are seeking innovation in 2024 to grow their brands as they say sales have taken a hit by the ongoing war in the Middle East. McDonald’s, Starbucks, Taco Bell and Burger King have released quarterly reports, showing the Israel-Hamas conflict has impacted their bottom line.
Yum Brands — which owns Taco Bell, Pizza Hut and KFC — missed Wall Street estimates, with revenue coming at $2.04 billion as opposed to the expected $2.11 billion.
“Before I discuss our results, I want to express our continued concern for those impacted by the ongoing conflict in the Middle East,” Yum CEO David Gibbs said to the company’s regional workers in a Feb. 7 investor call. “We continue to prioritize the safety and well-being of our franchisees and employees in the region.
“During the quarter, top line sales were impacted by the conflict in the Middle East region with varying degrees of impact across markets in the Middle East and Malaysia and Indonesia. This represented a low single-digit headwind to Yum’s overall sales growth.”
Yum’s Pizza Hut division was the target of a boycott after Pizza Hut Israel posted a now-deleted Instagram story appearing to show employees handing out free pizzas to Israel Defense Forces soldiers. The hashtag #BoycottPizzaHut became a trending topic on X.
Israeli soldiers expressing gratitude to Pizza Hut franchises in Israel for providing free meals to military bases. pic.twitter.com/kTYp1I7hNW
McDonald’s is facing a similar situation in the Middle East. While the company’s global same-stores sales grew last quarter by 3.4%, it was short of estimates of 4.7%.
The company faced boycotts from Muslim-majority countries late last year after an Israeli licensee offered discounts to IDF soldiers. McDonald’s shut down some locations temporarily for the safety of its employees.
In a message posted to LinkedIn last month, McDonald’s CEO Chris Kempczinski said he recognized “several markets in the Middle East and some outside the region are experiencing a meaningful business impact due to the war and associated misinformation that is affecting brands like McDonald’s.”
Kempczinski continued, calling the effects “disheartening and ill-founded.”
He echoed those sentiments during the most recent investor call.
“We recognize that families and their communities in the region continue to be tragically impacted by the war and our thoughts are with them at this time,” Kempczinski said. “McDonald’s has always been a beacon in our communities around the world, led by local franchisees who work tirelessly to serve and support. The ongoing impact of the war on these franchisees’ local businesses is disheartening and ill-founded. As our values state, McDonald’s will always proudly open our doors to everyone.”
Like McDonald’s, Starbucks’ global same-store sales increased in the last quarter, though only by 5%, short of estimate the 7.2% estimate.
Starbucks CEO Laxman Narasimhan said the coffee chain is experiencing the effects of “misperceptions” about the company’s stance on the war as well as a slowdown in foot traffic in U.S. stores.
“We saw a negative impact to our business in the Middle East. Second, events in the Middle East also had an impact in the U.S., driven by misperceptions about our position,” Narasimah said during the conference call. “Our most loyal customers remain loyal and in fact, increased their frequency of spend in the quarter. But we did see a softening of U.S. traffic. Specifically, our occasional U.S. customers, who tend to visit at the afternoon, came in less frequently.”
The controversy surrounding Starbucks began just two days after the October terrorist attack by Hamas, when Starbucks Workers United — a union representing hundreds of workers — posted “Solidarity with Palestine” on X.
While the post was taken down 40 minutes later, Starbucks said it led to more than 1,000 complaints and acts of vandalism at stores. The company sued the union for trademark infringement.
“Our position remains unchanged,” Starbucks said in a December 2023 statement. “Starbucks stands for humanity. We condemn violence, the loss of innocent life and all hate and weaponized speech. Despite false statements spread through social media, we have no political agenda. We do not use our profits to fund any government or military operations anywhere and never have.”
The week of Feb. 18, Restaurant Brands International — the parent company of Burger King — released its latest quarterly figures. Despite beating Wall Street estimates, the Middle East war still left a mark on the company’s overall business. CEO Josh Kobza said the impact was felt in “upward of a dozen countries.”
“We are not going to speculate on how long this headwind may last,” Kobza said on the conference call. “In the impacted countries, our entire focus is on the safety of our team members and partners.”
The war is now in its fourth month, and with no cease-fire plan in place, these U.S. restaurant chains are turning to new ideas and products to keep their sales from slipping at home and abroad. McDonald’s is planning to open more than 2,100 new U.S. locations this year and has recently released an updated version of its famous hamburger.
Burger King is set to remodel nearly 400 of its locations — some with what the company calls the “Sizzle” prototype — as it tries to freshen up its brand’s image. Starbucks is thinking beyond the coffee cup and adding new food items to its menu.
Yum Brands is looking to combat sales softening at its restaurants through new food offerings and loyalty rewards programs.
Taco Bell is planning to release one new product every five weeks. It unveiled this year’s upcoming menu items at an event in Las Vegas during Super Bowl week dubbed “Live Más Live,” in the vein of Apple’s product announcements.
Yum also spent money for a Super Bowl commercial advertising Pizza Hut’s new hot honey pizza and wings.
Other brands who have experienced backlash amid the war — Domino’s and Papa John’s — will release their quarterly earnings later in February.
More than 5,000 workers were expected to participate, engaging in picketing and visiting non-union stores.
AP Images
Edwin Palmasolis, a Starbucks employee for over two years, joined the strike, emphasizing the need for improved working conditions at his Manhattan store, which voted to unionize last year.
“We’ve been trying to negotiate with Starbucks,” Palmasolis said. “But they will do anything to, like, not meet with us, so they’ll stall or they’ll, like, appoint another day for them to meet with us. But not much has been said on their side.”
AP Images
“It’ll make a big difference in our lives if we start to see some changes,” Palmasolis said.
He added that the store in the middle of Manhattan’s busy Astor Place business district unionized last year, but it hasn’t been able to meet with Starbucks to negotiate a contract.
Starbucks asserted that many striking stores remained open, staffed by non-striking employees and supervisors.
The company opposes unionization, and despite numerous stores voting to unionize, it has not reached a labor agreement. Tensions between Starbucks and Workers United have escalated, leading to legal disputes, including a recent lawsuit where Starbucks accused Workers United of damaging its reputation with a pro-Palestinian social media post.
AP Images
As of Nov. 16, at least 363 company-operated Starbucks stores in 41 states have voted to unionize since late 2021, contributing to a broader trend of labor activism in the U.S.
Starbucks has faced 111 complaints of unfair labor practices, with regional National Labor Relations Board offices accusing the company of refusing to bargain. Despite starting negotiations with the Teamsters union, no labor agreement has been reached.
