Starbucks Corp. (NASDAQ:SBUX) is eliminating one of its most generous loyalty program benefits as part of CEO Brian Niccol‘s broader strategy to improve profit margins and reposition the coffee chain as a premium brand.
What Happened: Beginning June 24, Starbucks will end its 25-star bonus for customers using personal reusable cups, replacing it with double stars on entire orders, reported CNN, citing a Starbucks spokesperson. The current system, implemented in 2022, allowed customers to quickly accumulate points toward free items at the 100-point redemption level or premium offerings requiring 200-400 stars.
Under the new structure, customers ordering single beverages will receive fewer total stars. A $4 medium iced coffee in a personal cup currently earns over 30 stars when paid through the Starbucks app, but will drop to approximately 15 stars next month. However, customers with larger orders benefit from the double-star system across their entire purchase. The company maintains its $0.10 discount for reusable cup usage.
Why It Matters: This change represents Niccol’s latest effort to reduce discounts and promotions following weaker-than-expected earnings. The company reported comparable store sales down 1% globally, with U.S. sales declining 2% in the second quarter.
Analysts remain skeptical about the company’s resilience amid economic headwinds. Guggenheim analyst Gregory Francfort noted that as a discretionary purchase, Starbucks faces pressure if consumer conditions deteriorate. The stock has declined 25% from its February peak as the company pursues its “Back to Starbucks” transformation initiative under mounting competition, particularly in China where rival Luckin Coffee Inc. (OTC:LKNCY) generated $1.2 billion in quarterly revenue compared to Starbucks’ $740 million.
Photo: Ned Snowman/Shutterstock
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
