February 28, 2024

Starbucks’ rocky first quarter earnings missed analyst expectations. Part of the reason sales weren’t as strong as hoped in the U.S. was Israel’s war in Gaza, said the coffee chain’s CEO — without actually using the words “Israel,” “Gaza,” or “Palestine.”

In a call with investors Tuesday (Jan. 30) evening, chief executive Laxman Narasimhan, pointed to “misperceptions about [its] position” about “events in the Middle East” as a reason for a drop in traffic at its US stores.

Starbucks pleases no one

Starbucks has faced criticism for its messaging about the conflict in Gaza. After a New York store was painted with pro-Palestine graffiti, customers accused the company of standing against Israel.

More criticisms followed when Starbucks’ Workers United, the national union for the company’s baristas, posted a pro-Palestine statement on Instagram, sparking customer boycotts. The company sued the union over the post, saying it received more than 1,000 complaints from customers about the post and suffered “property damage, threats, and calls for a boycott.”

But next came boycotts from customers displeased with the lawsuit. One customer quoted by the Associated Press in December said Starbucks’ denouncing of pro-Palestine content amounted to “disregarding other people’s pain.”

The coffee chain’s CEO walks a fine line

It’s unsurprising that Narasimhan has decided to take a vague stance on the war. The CEO mentioned the Middle East five times in the call with investors without actually naming the countries involved in the conflict.

“I am deeply distressed by the violence shaking the region,” the executive told investors. “As I have shared, Starbucks condemns violence against the innocent, hate and weaponized speech. We are intensely focused on supporting our partners and the many other stakeholders affected by what is taking place.”

While the company failed to meet Wall Street’s forecasts, Starbucks shares rallied nearly 4% to $97.71 on Wednesday morning.

More than 25,000 Palestinians have been killed and 62,000 injured during Israel’s war in Gaza, following Hamas’ attack on Israel that killed about 1,200 people in the country. The death toll has led to accusations by international leaders of genocide against Palestinians, which Israel denies.

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