Sales at Starbucks are decreasing by 17%. Does it indicate how the economy is shaping up?

The value of the company’s shares has fallen by almost 17% since last week.

Many experts see the huge coffee company as a predictor of consumer spending, which makes up about three-quarters of the country’s GDP. In turn, the company’s most recent difficulties prompt the question: Is Starbucks experiencing problems, or is the American economy as a whole faltering?

A small amount of both are involved in the explanation, researchers told ABC News.

The experts explained that years of rising borrowing charges coupled with inflation had worn consumers out. They also mentioned Starbucks’ difficulties adjusting to the post-pandemic economy and the controversies surrounding its purported corporate position on the Israel-Hamas conflict.
According to Auburn University finance professor Albert Wang, “consumers have less demand for expensive coffee.” Wang made this statement to ABC News. “The company is also having problems.”

Starbucks did not immediately reply to a message from ABC News seeking comment.

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ng with the turmoil surrounding the Israel-Hamas conflict, Narasimhan also mentioned slower-than-expected performance in China as further sales obstacles.
But declining customer enthusiasm isn’t only a Starbucks problem, analysts told ABC News.

According to data issued last week by the U.S. Commerce Department, consumer spending in the country dropped significantly in the beginning of this year compared to the last few months of 2023.

The trend was accompanied by persistent inflation and a rise in credit card debt, indicating difficulties consumers experience in navigating swift price rises and high borrowing costs.

Spending has been slow, and this has hurt restaurant brands other than Starbucks. Yum Brands operates KFC and Pizza Hut, and earlier this month, the fast-food juggernaut McDonald’s also announced a decline in sales.

According to ABC News, Michael Jones, an economics professor at the University of Cincinnati, “it becomes a broader worry that you’re concerned about when you see it happening at companies outside of Starbucks.”

In contrast, Starbucks has had certain unique difficulties as a result of the general decrease in consumer demand.