Starbucks Faces Pricing Challenges in North America
Key Issues:
* High coffee prices compared to competitors
* Decline in global same-store sales
* Falling operating profit margins
JP Morgan Analysis:
* Analyst John Ivankoe believes Starbucks has pricing issues
* Iced latte at Dutch Bros. 13% cheaper than Starbucks
* Cup of drip coffee at Scooter's Coffee 32% less expensive
Strategic Initiatives:
* CEO Brian Niccol aims for sustained sales turnaround
* Focus on improving consumer perception of pricing
* Introduction of free in-store refills and ceramic mugs
* Simplifying mobile order and pay process
Earnings Challenges:
* 4% drop in global same-store sales
* 4% decline in North America and US same-store sales
* International sales decline of 4%
Analyst Outlook:
* Citi analyst Jon Tower believes Starbucks' pricing decisions will improve value perception
* Plans to revise pricing strategy for customization options
Ongoing Efforts:
* Starbucks is investing in marketing, staff, and in-store experience
* Niccol remains confident in growth despite challenges
* Company sees improvement in lapsed Starbucks Rewards customers due to non-dairy milk price parity