Starbucks CEO Brian Niccol draws flak after defending brand’s S$11 coffee
Starbucks CEO Brian Niccol was recently met with criticism after he defended the coffeehouse chain’s US$9 (S$11) coffee.
In an interview with the Wall Street Journal on 29 April, Mr Niccol was asked whether the brand is seeing the K-shaped trend in the current economy.
The K-shaped economy is described as an economic recovery where groups of people or industries experience vastly different outcomes – some thriving while others struggle.
In response, he defended Starbucks’ pricing strategy, claiming their offerings cater to a broad customer base, from teens to seniors.
CEO clarifies that ‘traditional coffee’ costs US$3
Mr Niccol stated that the brand foresees strong performance across all income groups.
He said that the average Starbucks spend was just under US$10 (S$13), but clarified that a traditional cup of coffee at Starbucks costs a much more affordable US$3 (S$4).
He then added that customers can “build their way into all sorts of customised drinks” that drive the higher price points.
Image courtesy of Eleana Melidis on Pexels. For illustration purposes only.
‘People want a special experience,’ says CEO
When questioned about whether Starbucks had been seeing the effects of the K-shaped economy in their sales, Mr Niccol argued that the brand’s appeal remained strong across income groups.
He suggested that the key reason for Starbucks’ continued success was that people “want to have a special experience”.
He said that depending on one’s income level, a “$9 experience” can be a splurge, but for others, it can be seen as a “really affordable premium experience”.
“Because they’re saying like, ‘Well, it’s less than $10, and I get a really premium experience,'” he added.
Starbucks to focus on service, not discounts
With customers perceiving the economy to be in a difficult state, Mr Niccol stated that Starbucks is prioritising service over discounts or promotional deals.
He shared that, after speaking to customers, the company learned that their Starbucks experience is a “moment of escapism”, which the brand hopes to continue.
As such, Starbucks plans to focus on delivering a warm and welcoming environment with fast service, comfortable seating, and a pleasant experience to justify the premium price.
Image courtesy of Czapp Árpád on Pexels. For illustration purposes only.
“The way we’re going to play the value game is you’re going to feel like it was worth it,” he said, adding:
“And I think if you have to try and compensate for not delivering on the experience, then that’s where I think you may have to lean into other promotions or discounting opportunities. But that’s really not what is in the DNA of Starbucks.”
CEO’s statement defending coffee price draws criticism
Netizens were unhappy with the CEO’s statements, with many saying he is “out of touch”.
One netizen said a $9 cup of coffee is overpriced, no matter what income group you belong.
Source: Instagram
Some users expressed that they do not go to coffeeshops for experience, but for coffee, while others questioned whether the experience the CEO described really exists.
Source: Instagram
Meanwhile, one netizen remarked that “a dude that takes a private jet everywhere he goes is not the best person to speak to what $9 means to regular consumers”.
Source: Instagram
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Featured image adapted from Starbucks, Lisa from Pexels on Canva for illustration purposes only.
