Recently, several netizens posted on social media stating that Starbucks has started implementing a "consumption seat" policy, and those who do not consume will be politely advised to leave. In addition, some netizens claim that there is a sign on the table of Starbucks stores that reads "Consumer Seat". Netizens speculate that this is because Starbucks has started reminding customers to make purchases before they can sit in.
The related content sparked heated discussions and surged to the top of Weibo's hot search.
Will Starbucks persuade people to leave if they don't consume and take their seats? Latest response
According to a live broadcast report by Jingshi, on May 21st, in Xi'an, Shaanxi, a netizen posted a video claiming that a man was persuaded to leave a Starbucks store just one minute after sitting down.
The video shows the man asking, "Are you not allowed to sit?"? Starbucks employees responded, "If you want to take a seat, just place an order on your phone. You can go to the mall and take a seat.". Finally, the man stood up and left.
The video publisher stated that he saw the salesperson persuade a total of three groups of people to leave.
On May 22nd, the reporter found through a search that multiple netizens reported on social media that Starbucks has started implementing "consumer seating".
Discussion on Starbucks consumer seating on social media platforms.
Some netizens also claimed that Starbucks issued a "polite persuasion to leave" notice.
The netizen posted, "Starbucks is really good, but every time I make a purchase, I can't afford it and lose a good place to daydream. A few days ago, I saw that it's okay not to make a purchase, but in reality, it's not possible. I would rush people, such as constantly asking for orders from you." The netizen said that he went to Starbucks for a while and didn't order because the staff kept "urging orders". In the end, the netizen stood up and left.
In the comment section of this post, there are many netizens leaving comments to discuss. Some people believe that since it is not necessary to consume, one should not politely persuade others to leave; Some people also believe that one should "try to consume as much as possible", otherwise those who want to consume may not have seats. The netizen also responded in the comment section, "Actually, it should be ordered. I hope Starbucks will continue to operate.".
Many netizens expressed support for this, believing that "to prevent people who want to drink from running out of seats". Some netizens also suggested that if Starbucks really wants to implement this policy, they can put up a sign on their seats with the words "consumption seat" written on it, otherwise it would be embarrassing to be persuaded to leave.
So, is the promotion of consumption oriented seating nationwide?
According to a live broadcast report by Jingshi, Starbucks official customer service responded that Starbucks does indeed engage in "consumption seating". If they do not consume, they will be politely advised to leave by the store staff, but Starbucks will not force customers to consume.
Lawyer: Or infringe upon the legitimate rights and interests of consumers
Does it infringe on consumer rights for merchants to drive away those who have not consumed their seats?
According to media reports, lawyers Huang Kailing and Yang Enxiong from Guangdong Green Law Firm have stated that many milk tea shops or coffee shops have tables and chairs at their doorstep, and there has been controversy over whether they can be seated or used without consumption.
The lawyer stated that if the store allows customers to use it, it means that the store has provided services. According to Article 3 of the Consumer Rights Protection Law, if the operator provides services to consumers, this law applies.
Article 16 of the Consumer Rights Protection Law stipulates that when providing goods or services to consumers, operators shall abide by social ethics, operate with integrity, and protect the legitimate rights and interests of consumers; Unfair and unreasonable trading conditions shall not be set, and forced trading shall not be allowed.
The lawyer also stated that Starbucks had updated its employee handbook a few years ago, stipulating that customers who had not made purchases were allowed to sit in the store or use the restroom. In other words, Starbucks has provided services to its customers and is subject to the Consumer Rights Protection Law, which stipulates that Starbucks should fulfill its obligations under the law. In this incident, if the store staff drove away those who had not consumed, it clearly infringed on the legitimate rights and interests of consumers.
Starbucks China's revenue has declined
The market value has evaporated by over 140 billion yuan compared to the end of last year
Starbucks recently disclosed its financial report, which showed that in the second quarter of 2024 ending at the end of March, its revenue was $8.563 billion, a year-on-year decrease of 1.8%; The net profit attributable to the parent company was 772.4 million US dollars, a year-on-year decrease of 15%.
As of the end of the second fiscal quarter, Starbucks had 7093 stores in China, a net increase of 118 compared to the previous quarter.
In the current period, Starbucks China's revenue was 705.8 million US dollars, a year-on-year decrease of 8%. Among them, same store sales decreased by 11% year-on-year, mainly due to a 4% decrease in year-on-year transaction volume and an 8% decrease in average unit price.
"Macro pressures have led to a decrease in traffic this quarter, which has been affected by occasional customer reductions, changes in holiday patterns, a highly promotional environment, and standardized customer behavior since the reopening of the market last year." In a financial report conference call, Starbucks CEO Laxman Narasimhan explained the volatility of the Chinese market.
Behind it is the slowdown in market growth and the continuation of a brutal price war.
This is the second year that the industry has entered a price war.
On April 29th, Kudi Coffee announced that the current store subsidy policy will be extended until December 31st, 2026, covering existing stores and future new stores. Different stores can receive different amounts of subsidies based on factors such as rent and competition, with a maximum subsidy of 14 yuan per cup. As of May 10th, in Beijing, Luckin's 9.9 yuan product is limited to categories and limited to individuals. Kudi continued to charge a full 9.9 yuan.
This market clearly has an impact on Starbucks, for example, the self proclaimed high-end brand's unit price has declined.
As of the close on May 23, Starbucks' stock price closed at $78.305, a decrease of 2.99%, with a total market value of $88.696 billion, which has evaporated approximately $20 billion (approximately RMB 145 billion) since the end of last year.
Accelerated sinking
At least, Starbucks is verbally unwilling to participate in a price war.
Nasihan emphasized that Starbucks is a high-end brand. One case is that Starbucks is launching more new products in China. In the second quarter, Starbucks China launched a total of 27 new products, with the number of new products being twice that of the previous quarter and three times that of the same period last year. The brand claims that the Yilan Duo series of beverages performed better than expected.
During the same period, Starbucks exceeded 21 million active members in 90 days, reaching a historic high with a total membership of over 127 million. The proportion of member sales has increased to 75%. The consumption frequency of Venus members has also increased.
In addition, during the current period, Starbucks China's digital business (specialized star delivery and coffee delivery) accounted for nearly 52%. Among them, the fast delivery business accounted for 26%, and the same store sales of Zhuanxing Delivery achieved growth.
But this still cannot change the declining trend of Starbucks' revenue in China. At present, the company is focusing its increment on the lower tier market.
"Given the strong economic benefits of new stores in the sinking market, we will further expand our new stores in the sinking market, especially in new county-level cities," said Nasihan.
Starbucks China Chairman and CEO Wang Jingying also revealed during the financial report conference call that Starbucks has covered nearly 900 cities in nearly 3000 county-level and above cities in China. This quarter, the number of 90 day active members in the sinking market grew rapidly, with member growth rates exceeding those in high tier cities. Membership sales have grown significantly, with a sales growth rate twice that of high tier cities.
Previously, Wang Jingying told 21st Century Business Herald reporters that more refined operations are needed in lower tier cities. "When we enter a county, there is a very different approach to ensure that we don't just open a store, but rather open a store for the area and community," she said. This indicates that Starbucks needs to be more flexible in management.
Furthermore, the question of how much purchasing power a sinking market has is an unavoidable one.
Nowadays is an era of pursuing cost-effectiveness. According to financial reports, in the first quarter, KFC's customer price dropped 6% year on year, Pizzahut's customer price dropped 12% year on year, and Taier pickled Chinese cabbage fish/hot pot/Jiumaoju's customer price was 73/116/57 yuan, 2.7% lower/4.1% lower/3.4% lower than the first half of last year. In 2023, the average customer price of Hai Di Lao has dropped to below 100 yuan (99.1 yuan). Hefu Lo mein revealed that the overall decline of products was about 30%.
"In the past, we almost did not hesitate to price products at 34 or 35 yuan. Now we will take market factors into consideration when pricing," Li Xuelin, founder of Hefu Lo mein, told the 21st Century Economic Report.
From a more macro perspective, a similar trend is also observed. According to data from the National Bureau of Statistics, the growth rate of per capita disposable income in the first quarter was 6.2%, while the growth rate of per capita consumption expenditure reached 8.3% in the first quarter, exceeding the growth rate of income.
This means that an increasing portion of income is being used for consumption, reflecting an increase in public willingness to consume. It also means that it is more difficult for consumption to continue to grow.
In such a situation, Starbucks choosing to increase its investment in the lower per capita disposable income sinking market is undoubtedly a risky move.
According to previous plans, Starbucks plans to open 9000 stores in 300 cities in China by 2025.
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