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The ‘Starbucks Index’

“Triple Star Day” was the Beginning of the End
May 1, 2024

Pictured: Phillip’s February prediction of weakening consumer spending.

If ‘Triple Star Day’ Can’t Heal our Nation, Nothing Can

You’ve heard of the Waffle House Index, or the Lipstick Index. How about the Starbucks Index

Despite their recent innovations in gastric distress, the world’s largest burnt coffee chain might now be a leading consumer confidence indicator after it turned in a less-than-robusto Q1. 

On February 15 we memorialized this prediction in a special episode of our membership-only podcast episode, After Dark. In the show, we discussed a string of rewards days from Howie Schultzie & Co; a move often seen to be desperate, and devaluing to a brand.

A post-Valentine’s app promotion from Starbucks came off as desperate, something we discussed at the time on the Future Commerce After Dark program: 

I went in to the Starbucks today. It is the first day back at school after a three day weekend no reason for no one to not be in Starbucks that place was empty on three days of  ‘triple star’ days.

Maybe [Starbucks is] trying to prop up their Monday… or maybe something is up with consumer spending.

Triple Star Days began in Q4 of 2023, returning as much as three times the typical rewards-earning potential. In combination with other offers, like cash-back multipliers when reloading your account with payment partners like Paypal, or linking Delta Rewards in the app? Starbucks is going unleaded, no-filter.

It turns out I was right, and it also seems that Starbucks is the newest economic index that we didn’t know we needed. While vice categories usually ebb during recessions, restaurant and dining tends to be where shoppers run to Dunkin.

Starbucks stock traded down as much as 12% in after-hours activity after an unexpectedly weak Q1 earnings report. Here are the top notes:

  • China down eleven percent
  • North America down 2%
  • Overall revenue flatter than an Aussie latte

Combine this with a new less-than-stellar CCI print? We might need to switch to decaf.

“But I thought Starbucks was a bank?” Hopefully in the economy to come they’re more Goldman Sachs than Bear Stearns.

— Phillip

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