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Starbucks Korea posts first quarterly loss in 27 years after PR fallout
Starbucks Korea said it would focus on stabilizing operations and restoring brand trust after an operating loss of 18.4 billion won, alongside a 6.1% drop in net sales to 747.3 billion won.
Bloomberg reported that Starbucks Korea posted its first quarterly loss since it began operations 27 years ago, citing a marketing debacle that sparked a boycott and heightened public criticism, including a police raid of corporate offices. Starbucks Korea operator SCK Company Co. recorded an operating loss of 18.4 billion won, or $12.9 million, for the three months through June.
The company said net sales fell 6.1% year over year to 747.3 billion won, even though it added 49 more stores in South Korea during the quarter. Starbucks Korea said it will concentrate on business stabilization by restoring brand trust.
The PR controversy centered on Starbucks Korea's “Tank Day” promotion in May, which offered discounts on large “Tank” tumblers on the anniversary of South Korea’s 1980 Gwangju uprising. US-based Starbucks Corp. described the campaign as unacceptable, and the report said Starbucks Korea’s chief executive was dismissed.
Bloomberg also reported that Shinsegae Group chairman Chung Yong-jin apologized on television and took responsibility, with the episode tied to ownership structure at SCK Company, including Shinsegae’s 67.5% stake and the rest held by Singapore’s sovereign wealth fund. The report added that Starbucks Korea closed more than 2,000 stores early on June 22 so employees could undergo training on modern Korean history and social sensitivity.