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Starbucks Faces Backlash In China Over Police Incident At Store; Starbucks, Tim Hortons Raise Prices In China

By Dave Simpson

Starbucks SBUX.O is battling its second bout of public fury in China in less than three months, after an incident described by the US coffee giant as a "misunderstanding" at one of its stores sparked criticism from online users and state media.

Details

The company came under scrutiny after a user on Weibo said that a number of police officers had been eating outside a Starbucks store in the southwestern city of Chongqing before they were told by staff to move away.

The user's description of the incident quickly went viral on the Twitter-like platform, prompting the ruling Communist party's mouthpiece People's Daily newspaper to issue a commentary, in which it called Starbucks "arrogant".

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Chinese consumers and media have become more aggressive about protecting customer rights and monitoring the behaviour of big brands, especially from overseas.

In December, Starbucks apologised and carried out inspections and staff training across all its roughly 5,400 stores in China after a state-backed newspaper said two of its outlets used expired ingredients.

Starbucks apologised on its Weibo account for "inappropriate communications," saying that the whole thing was a misunderstanding.

But it said that staff had never chased away policemen or tried to file complaints against them.

It continued to face criticism online the following day, with a few small companies announcing on Douyin, the Chinese equivalent of TikTok, that they would "boycott" Starbucks by forbidding employees from arranging meetings in or buying drinks from the shops of the coffee chain.

However, Hu Xijin, a prolific commentator in China who is the former editor-in-chief of The Global Times newspaper, urged his Weibo users to see the Starbucks Chongqing incident as an accident and not more, adding that Starbucks's status as a foreign brand should not subject it to more criticism.

"China is a country that is open to the world," he said. "To label a mistake as arrogance is not conducive to the bigger environment of opening-up."

Starbucks, Tim Hortons Raise Prices In China

The above news was followed by news that coffee chains such as Luckin Coffee and Tim Hortons have increased the prices of their beverages in China, with US giant Starbucks SBUX.O blaming "multiple factors" such as higher operating costs.

The chains, among China's largest coffee players, raised prices by between one yuan and three yuan ($0.16 and $0.47), according to menus on mobile apps and media reports, with the topic going viral on Chinese social media.

Although a nation of tea drinkers, China is one of the world's fastest growing coffee markets, with nearly 110,000 shops in larger cities by April, consultants Deloitte have said, as young people drive consumption, which lags the United States and Europe, however.

Starbucks said that it had adjusted the prices of some of items after "comprehensive evaluation and consideration of multiple factors" such as operating costs, in the first increase since 2018.

A Starbucks Americano costs 30 yuan after the price increase, up from 28 yuan.

Packaged coffee beans and merchandise such as mugs were not affected, however, the company told Reuters in a statement.

China's Luckin Coffee raised the price of some beverages by approximately three yuan, taking into account operational costs such as rent, manpower and raw material, the state-backed Shanghai Securities Journal said.

Luckin did not immediately respond to a Reuters request for comment.

Tim Hortons declined to comment.

Starbucks hiked menu prices in October and January and plans further raises this year, chief executive Kevin Johnson has said, in part to offset soaring labour and goods costs, but he did not specify individual products.

Official data showed China's coffee market grew at an annual rate of 15% in 2018, versus a global average of 2%.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.

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Enjoy full access to Hospitality Ireland, our weekly email news digest, all website and app content, and every digital issue.
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