Starbucks acknowledges supply shortage as reopening pace accelerates
- Coffee chain giant Starbucks is reporting shortages of key supplies at some stores.
- Data from analytics firm Placer.ai confirms the ‘returning to normalcy’ is boosting demand.
- Placer.ai speculates ‘massive’ foot traffic impact as markets like New York and California catch up.
As the US economy continues to reopen, coffee chain Starbucks Corporation (NASDAQ: SBUX) is struggling to keep up with pent-up demand, The Wall Street Journal reported.
Adjusting menu options
Starbucks baristas told WSJ their stores have run out of coffee syrups, cups, and even food items like cake pops amid a surge in demand. To address near-term supply issues, Starbucks will pause production of lower-sales items to free up ingredients to make higher-selling ones, a source told the publication.
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The company itself acknowledged the shortage issue and sent a message to its app users. The message said “some of your favorites may be temporarily out of stock” and the company is “sorry for the inconvenience.”
Starbucks is also contending with staff shortages in some locations. A store in Wisconsin told WSJ it is offering $200 bonuses to staff members who refer someone to be hired.
Placer.ai data confirms demand explosion
Data from foot traffic analytics firm Placer.ai shows visits to Starbucks locations were down 4.2% year-over-year in April. Rival Dunkin’ Donuts managed to show a complete recovery from April 2019 levels.
The analytics firm attributes the recovery in traffic to the “returning normalcy” of workplaces and school routines along with the broader retail re-openings.
New York, California are lagging behind
What’s most interesting about Starbucks’ supply shortage is the fact that mega markets like New York and California are lagging behind smaller regions. For example, visits at Starbucks stores in Texas and Florida rose 6.5% and 13% respectively for the week beginning May 17 compared to the same period in 2019, according to Placer.ai.
By contrast, California and New York showed traffic was down 14.2% and 7.5% respectively compared to the same period. Placer.ai VP of Ethan Chernofsky stated in the report:
The clear conclusion here is that the re-openings and the return of regular routines are driving a major boost for the coffee sector. Top brands are already in range of 2019 levels, and this is without a full recovery in two of the most important states – California and New York. As those areas return, the direct impact on visits to brands like Starbucks and Dunkin’ could be massive.