Starbucks' biggest problem is only getting worse

Starbucks is having a rough start to 2017, as the chain struggles to attract customers to stores.

The coffee giant accounted for 11% of US restaurant foot traffic in February, down from 12% in January, according to data from the research firm xAd, which was first reported by Bloomberg.

An xAd spokesperson told Business Insider that it is difficult to pinpoint a specific factor that drove the change. However, Starbucks has recently been facing both operational issues and brand reputation challenges.

In January, Starbucks reported that transactions, an important measure of customer traffic, dropped 2% in the most recent quarter, in large part due to problems caused by mobile ordering. The company said bottlenecks created by a wave of mobile orders pouring into busy stores have resulted in crowds that turn some customers away.

The company also faced backlash after CEO Howard Schultz announced plans to hire 10,000 refugees worldwide in the next five years in response to Donald Trump’s executive order intended to prevent refugees from entering the US.

Howard schultz starbucksStephen Brashear / Stringer / Getty ImagesStarbucks CEO Howard Schultz.

By late February, the coffee giant’s consumer perception levels fell by two-thirds since late January, according to YouGov BrandIndex. According to Credit Suisse’s net sentiment tracker, online sentiment about the chain has dropped to its lowest level since at least 2014 — lower than it was when the chain was criticised for its red cups that some said were not “Christmas-y” enough.

“Net sentiment has since recovered, but has seen significant volatility in recent weeks,” Credit Suisse’s Jason West wrote in a report. “While this is only one data point, the analysis leaves us incrementally cautious on Starbucks’ ability to meet consensus US [same-store sales] forecasts.”

Then there’s the issue of this year’s unseasonably warm winter. Bloomberg reported that customers typically buy less coffee during a mild winter, with sales of coffee at supermarkets falling 2.7% in January and 1.3% in February compared to last year, according to data from market-research firm IRI.

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