Not a happy holiday at Starbucks, facing boycotts over Middle East war, unionization

Last weekend, Starbucks got a report that a New York store had been spray-painted with pro-Palestinian graffiti. A few hours later, at a store eight blocks away, a customer berated employees, accusing the brand of being anti-Israel.

It’s been a tough few weeks for the world’s largest coffee company. At a time when it hoped to be spreading holiday cheer and peppermint mochas, it’s juggling boycotts over the war in the Middle East and a unionization effort at home.

In an open letter to employees Tuesday, Starbucks CEO Laxman Narasimhan decried the vandalism of stores and escalating protests in the U.S. and abroad.

“While I am grateful for so much, I am concerned about the state of the world we live in. There are conflicts in many parts. It has unleashed violence against the innocent, hate and weaponized speech and lies — all of which we condemn,” he wrote. “Our stance is clear. We stand for humanity.”

Seattle-based Starbucks won’t yet say how its sales have been impacted. The company’s next quarterly sales report won’t come out until February. But there are indications Starbucks is taking a sales hit.

In early December report, J.P. Morgan analyst John Ivankoe lowered his U.S. sales forecast for Starbucks’ fiscal first quarter, saying holiday sales appeared to be slower than promotions in the fall. Starbucks’ share price tumbled on the news. Meanwhile, videos posted on X show protests and empty stores in London, Australia, Dubai and elsewhere.

Some of Starbucks’ problems have been self-inflicted. It kicked off a wave of anger in October when it sued Workers United — the union organizing its employees — because the union had posted a pro-Palestinian message on social media. Starbucks sued to stop the union from using its name and logo, saying the company had no official stance on the war and the union’s post might confuse customers. But protesters saw the company’s move as pro-Israel.

In mid-November, the company refiled its lawsuit. This time, it included language saying it respected workers’ rights to express their views on the war in the Middle East and other political issues, and said the lawsuit was about protecting workers’ safety and Starbucks’ reputation. But the damage was done.

Other issues have cropped up because of misinformation on social media. Posts on X incorrectly accuse the company of directly funding genocide in Gaza, for example.

It’s a swift reversal for Starbucks, which reported record sales in its latest quarter, which ended Oct. 1. It celebrated the 20th anniversary of the Pumpkin Spice Latte and said growth was accelerating in China.

Even then, though, tensions were simmering. U.S. workers at more than 370 company-owned Starbucks stores have voted to unionize since late 2021, but the company and the union still haven’t agreed to a contract at any of those stores.

On Nov. 16, workers at several hundred U.S. Starbucks stores walked off the job in protest. That hurt sales on what is usually one of the company’s busiest days of the year.

Starbucks, which opposes the union effort, has also tried to shift the conversation on that issue. Earlier this month, the company announced it was committed to bargaining with its unionized workers and reaching labor agreements next year.