SEATTLE – Starbucks, once the top name in premium coffee, now faces a mix of tough issues worldwide. Sales are down, there are rumours it might sell its business in China, its share price is falling, and it’s dealing with staff problems and rival brands across key markets like Thailand.
With coffee beans costing more and customers seeking cheaper coffee, the US-based chain faces a test. New CEO Brian Niccol now leads the push to turn things around.
Starbucks has seen a sharp fall in sales. In the last quarter of 2024, same-store sales dropped by 7 per cent, marking the steepest fall since the height of the pandemic. The US, its biggest market, saw a 6 per cent fall in same-store sales, caused mainly by a 10 per cent drop in visits despite a small rise in average spend.
Things look worse in China, Starbucks’ second-largest market, with over 7,600 shops. Same-store sales there fell 14 per cent, with both lower prices per order and fewer transactions.
Starbucks’ higher prices make it harder to keep price-sensitive customers. Lattes cost close to $6 in the US and about 33 yuan ($4.60) in China, sending more people to cheaper cafes.
The start of 2025 brought little relief. Global same-store sales declined 1 per cent, and net income dropped to $384.2 million, half of last year’s figure. In the US, transactions fell by 4 per cent. Sales in China were flat, which is an improvement, but still not a sign of real recovery.
Soaring coffee bean prices, driven by poor crops and higher demand, have squeezed profits further. Operating margins shrank to 6.9 per cent, down from 12.8 per cent a year ago.
Rumours About Starbucks’ China Operations
Starbucks faces not just falling sales in China, but also speculation over its future there. In June 2025, the financial magazine Caixin reported that Starbucks might sell its China business for $5-6 billion.
This drew interest from global investors such as KKR, Fountainvest, PAG, and Chinese companies like Meituan and China Resources Group. Starbucks denied rumours of a full sale, saying it is only looking at selling a minority stake to stay relevant, as its market share plunged from 34 per cent in 2019 to 14 per cent in 2024.
Competition in China is aggressive. Local brands like Luckin Coffee and Cotti Coffee have expanded fast, offering lower prices. Luckin now has more than 21,000 shops and grew sales by 41 per cent to $1.5 billion in the third quarter of 2024, serving 80 million customers a month. Cotti, run by ex-Luckin executives, offers coffee for as little as 8.8 yuan with coupons, a fraction of Starbucks’ prices.
Both use mobile apps and delivery to win over younger, budget-focused customers who want convenience over the classic Starbucks sit-in experience. Starbucks has responded by cutting the price of some iced drinks by an average of 5 yuan in China, a rare move for the brand.
Share Price and Investor Concerns
The company’s share price has followed its troubles. Starbucks shares have dropped 8 per cent in 2025 so far, falling another 9 per cent in premarket trading after its Q2 earnings report. Shares fell 6.5 per cent in late trading after those results and are down about 7 per cent this year, trailing the S&P 500, which gained 88 per cent over five years.
Starbucks’ choice to suspend its 2025 financial guidance has only added to the uncertainty, worrying investors as the chain faces tariffs, unstable coffee prices, and slow progress in its turnaround.
Starbucks’ troubles also affect its workers. In November 2023, more than 200 US locations saw walkouts during Red Cup Day as union staff pushed for better schedules and pay. Led by Starbucks Workers United, the strikes disrupted business and led to a $10.98 billion loss in company value as fewer people visited stores. Public opinion has also dropped, with Starbucks’ reputation score falling from 71.5 in 2021 to 57.7 in January 2025, showing less trust among customers and staff.
CEO Brian Niccol, who started in September 2024, has launched the “Green Apron” model, which uses new tech in stores and a dedicated barista for every drive-thru. Early tests are positive, with sales and service times improving. The aim is to cut wait times to four minutes or less. But rolling this out to all 11,000 company-owned North American shops by summer 2025 will mean higher labour costs and put more strain on profits.
Starbucks Faces Fierce Competition in Thailand
In Thailand, Starbucks faces the same tough market conditions. It has over 400 stores, with several in Chiang Rai, and has long been a status symbol in cities. Now, local chains like Café Amazon, with more than 3,700 outlets, and international brands like The Coffee Club and TrueCoffee, are growing fast. Café Amazon stands out with much lower prices, often half what Starbucks charges, and more shops in petrol stations and malls. Its Thai-inspired drinks, like Thai tea lattes, connect with local tastes.
Starbucks Thailand has tried to fight back by offering local drinks like mango passionfruit frappuccinos and improving its rewards programme, but high prices remain a problem. A Starbucks latte in Thailand costs about 140-160 THB ($4-5 USD), much higher than Café Amazon’s 70-90 THB. Bubble tea chains like ChaTraMue and affordable home espresso machines are also drawing younger customers away.
In Chiang Rai, boutique coffee shops with unique blends at lower prices are winning over both locals and tourists.
Rising coffee prices are pushing customers to try new options. Arabica bean costs have doubled over the past year, affected by bad weather, political tension, and shipping delays. This puts extra pressure on Starbucks’ margins and customers’ wallets.
In the US, chains like Dutch Bros and McDonald’s McCafé serve coffee at about half the price of Starbucks, while smaller brands like Blue Bottle attract fans who care more about quality than brand name. At-home coffee machines, which can brew a cup for about $1, are another popular choice.
Thailand’s younger crowd is turning to bubble tea and instant coffee. The National Coffee Association says US coffee drinking is at a 20-year high, but Starbucks isn’t benefiting because of its high prices and slow product changes. In China, rivals like Luckin pull in customers with unique drinks, like baijiu-infused lattes that appeal to local tastes.
Niccol’s “Back to Starbucks” plan includes a simpler menu, fewer items (down 30 per cent), ceramic mugs making a comeback, and self-serve condiment bars to revive the old coffeehouse feel. In Thailand, making shops feel more inviting with comfy seating and latte art could help Starbucks stand out. But with ongoing boycotts linked to global issues and labour unrest, winning back customer loyalty remains a big challenge.
Starbucks’ future depends on finding the right balance between affordable prices and its premium image, while fixing operational issues. In Chiang Rai and around the world, the company needs fresh ideas to win back coffee drinkers. As Niccol put it, this is about building back a better business, not just a bigger one. Whether Starbucks can regain its place as the top coffee spot is still uncertain, but the pressure has never been greater.
