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By Mihar Dias (C) Copyright December 2023
The once vibrant Starbucks outlets in Malaysia now stand as desolate spaces, abandoned by the young and trendy clientele that once made it their social hub.
What was initially perceived as a manageable boycott has revealed itself to be a more formidable challenge, with RHB Bank's research advising investors to divest from Berjaya Food, the franchise owner, citing a significant 24% decline in stock prices.
This boycott's impact, far from easing, may linger, especially if the Israel-Hamas conflict remains unresolved, casting a shadow over Berjaya Food's prospects for recovery.
The on-the-ground investigation conducted by RHB Bank witnessed a substantial 30-40% drop in foot traffic, even in bustling malls, underscoring the severity of the situation. Meanwhile, Starbucks competitors are avoiding a similar downturn, indicating a unique struggle for the coffee giant.
The timing of the boycott couldn't be worse for Starbucks, disrupting its usual peak seasonal period and posing a threat to the company's expansion plans, potentially affecting new store openings. RHB Bank's projections of a steady erosion in net profits for Berjaya Food, from 21% in 2024 to 7% in 2026, paint a worrisome trajectory.
Starbucks Corp faces international challenges, experiencing a record decline in shares and growing concerns about sales trends. With an 11th consecutive session of losses erasing 9.4% of Starbucks's market value, equivalent to nearly US$12 billion, the global outlook is grim.
As the owner of Starbucks in Malaysia, Berjaya Food navigates these stormy waters within the broader context of US-based chains facing boycotts due to perceived ties to Israel.
The immediate and long-term implications for Starbucks in Malaysia hinge on the resolution of the boycott and its ability to recover in an intensely competitive market.
The stakes are high, and Starbucks must find a way to weather the storm or face a lasting impact on its presence in Malaysia's coffee culture.
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