Starbucks Will Never Learn: New Program Encourages “Bipartisan Coffee Drinking”
Seemingly no amount of brand destruction will ever be sufficient to convince Starbucks CEO Howard Schultz that while most adult-aged Americans seem to like his company’s coffee, roughly 50% of them couldn’t give a flying flip about his leftist political opinions that he’s constantly try to shove down their throats along with their morning java.
The latest gimmick comes via a partnership with Boston-based startup “Hi From the Other Side” and offers free coffee to people with opposing political opinions who agree to meet up at Starbucks to “engage in a civil conversation” about their political differences. Per The Hill:
Participants who sign up (there’s currently a waitlist) for the app through Facebook are paired up with another local from the opposing political party.
The app brings together “nice people across the political divide to talk like neighbors. Not to convince, but to understand,” the Hi From the Other Side website states. The company says it’s “hopeful there are people who really want to engage in a civil conversation.”
As part of a recently launched, limited promotion, the startup says those who sign up and are matched will receive a Starbucks e-gift card.
“This means you’ll have to show up and work together to unlock the gift card!” according to its site.
And here’s “Hi From the Other Side’s” take on the program:
“Hi From The Other Side has a way for you to make a connection over a great cup of coffee at Starbucks. If you are one of the first to be matched during this limited offer, you will receive a Starbucks e-gift card to redeem together at a nearby store. This means you’ll have to show up and work together to unlock the gift card!“
Of course, all of this comes just a few weeks after Schultz’s public announcement to hire 10,000 refugees, a clear shot at the Trump administration’s immigration policies, seemingly backfired with his “brand perception” taking a sudden and massive hit (we wrote about it here: “Starbucks’ ‘Brand Perception’ Takes A Massive Hit After Announcing Plans To Hire 10,000 Refugees“).
Credit Suisse’s Restaurant team, led by Jason West, also took note of the constant damaging political campaigns and warned that Schultz’s refugee stunt could cause the company to miss upcoming same-store-sales estimates.
We have analyzed online “net sentiment” data (positive vs. negative online mentions) provided by NetBase to gauge changes in Starbucks’ brand perception. This follows recent media reports that SBUX’s decision to hire 10,000 refugees over the next five years could have upset some customers, perhaps negatively impacting sales trends. Our work shows a sudden drop in brand sentiment following announcement of the refugee hiring initiative on Jan. 29th, to flattish from a run-rate of ~+80 (on an index of -100 to +100). Net sentiment has since recovered, but has seen significant volatility in recent weeks. While this is only one data point, the analysis leaves us incrementally cautious on SBUX’s ability to meet consensus US SSS forecasts, which call for SSS to accelerate from +3% in F1Q17 (Dec. qtr.) to ~+3.5% in F2Q and ~+5.5% in 2H17.
Potential impact to F2Q SSS: NetBase data show that net sentiment remained depressed for 10 days in late Jan. and early Feb. and was particularly volatile through the remainder of Feb. We see potential for a scenario in which US SSS slowed for a few weeks following news of the refugee hiring initiative, negatively impacting full-quarter SSS by ~70-80bps under a reasonable bear case. This assumes that (1) SSS during the initial 10-day stretch were ~flat, (2) SSS averaged +2% during the remaining 3 weeks of Feb. (when net sentiment saw particularly high volatility) and (3) SSS during the rest of the qtr (Jan. and Mar.) average +3.5% (in line with consensus forecasts for F2Q), putting F2Q US SSS at ~+2.8%. We caveat that we found little to no correlation over longer time periods between the net sentiment data and US SSS. However, in our past work on Chipotle (CMG: Neutral), we found that large and sudden spikes in net sentiment coincided with similar shifts in SSS trends.
For those who missed it, here are some excerpts from the politically charged message drafted by Schultz to his employees with “deep concern and a heavy heart”:
I write to you today with deep concern, a heavy heart and a resolute promise. Let me begin with the news that is immediately in front of us: we have all been witness to the confusion, surprise and opposition to the Executive Order that President Trump issued on Friday, effectively banning people from several predominantly Muslim countries from entering the United States, including refugees fleeing wars. I can assure you that our Partner Resources team has been in direct contact with the partners who are impacted by this immigration ban, and we are doing everything possible to support and help them to navigate through this confusing period.
Hiring Refugees: We have a long history of hiring young people looking for opportunities and a pathway to a new life around the world. This is why we are doubling down on this commitment by working with our equity market employees as well as joint venture and licensed market partners in a concerted effort to welcome and seek opportunities for those fleeing war, violence, persecution and discrimination. There are more than 65 million citizens of the world recognized as refugees by the United Nations, and we are developing plans to hire 10,000 of them over five years in the 75 countries around the world where Starbucks does business.
Building Bridges, Not Walls, With Mexico: We have been open for business in Mexico since 2002, and have since opened almost 600 stores in 60 cities across the country, which together employ over 7,000 Mexican partners who proudly wear the green apron. Coffee is what unites our common heritage, and as I told Alberto Torrado, the leader of our partnership with Alsea in Mexico, we stand ready to help and support our Mexican customers, partners and their families as they navigate what impact proposed trade sanctions, immigration restrictions and taxes might have on their business and their trust of Americans.
Apparently nothing will ever convince some of America’s leftist billionaires that, no matter how rich they become, they will never be able to force their political opinions on Americans who see through their propaganda…just ask all the rich people that just lost a fortune trying to elect Hillary.
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