Starbucks Comeback? Execs Are Betting More Merch Will Make Up for Stingier Rewards
There was a buzz around Starbucks’ investor day last week — and it wasn’t just from all of the caffeinated beverages available for attendees to sample. The coffee giant pointed to its recent quarterly results as proof that the turnaround plan it launched in 2024 is starting to show results.
Although Starbucks missed first-quarter earnings estimates, transactions grew for the first time in two years. The company said the increase came both from loyalty members as well as non-members for the first time since 2022. More seasonal and limited-edition products — like the “bearista” cup that went viral last holiday season — plus an overhauled customer loyalty program were two key elements of its turnaround.
In other words, the brand that launched the PSL (that’s pumpkin spice latte, to the uninitiated) more than two decades ago plans to lean into customers’ sense of urgency around limited-edition and seasonal collectibles.
At the event, global chief brand officer Tressie Lieberman said “limited merchandise, nostalgic moments and partnerships” were “critical” to driving repeat business, a focus for the brand after revenue dropped by 3% to $9.1 billion in the final quarter before current CEO Brian Niccol took the helm.
Lieberman's remarks suggest that get-’em-before-they’re-gone promotions — and the viral crazes they spark — are going to become more common.
Starbucks Rewards changes draw backlash
Along with seasonal tchotchkes and promotions, company executives touted the “reimagined” Starbucks Rewards program, saying that its three tiers — Green, Gold and Reserve — will deliver better rewards to its more than 35 million active loyalty members in the U.S. when it is implemented next month.
Some users begged to differ.
On social media, customers criticized changes like caps on the value of free drinks that can be earned with stars and restricting access to a new online storefront for branded merchandise to the Gold and Reserve tiers of its loyalty program.
The overhauled reward earnings framework proved to be an even greater flashpoint. Topping the list of complaints: Slower accrual of rewards “stars" for the brand’s most loyal customers. Across multiple platforms, longtime Starbucks customers lamented that the highest baseline earnings level will drop from 2 to 1.7 stars per dollar spent. (And in some cases, those dollars might not go as far as they used to: Starbucks CFO Cathy Smith said the company plans to implement “targeted” price increases.)
"I did the math: the new program is a massive baseline devaluation," one Redditor wrote above a screenshot of a spreadsheet breaking down the math behind the new tiers.
For Starbucks loyalists, it's sure to be eye-opening — no caffeine necessary.
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