Over 100 Starbucks outlets in Malaysia have reportedly closed, either temporarily or permanently, as a result of a growing boycott against U.S. brands. This movement is largely fueled by protests against U.S. support for Israel amid ongoing conflicts in the Middle East. Starbucks Malaysia, however, has denied these claims, stating that only a few locations have permanently closed, while most are temporarily shut for strategic reasons.

Key Takeaways

Over 100 Starbucks outlets in Malaysia are reported closed due to a boycott against U.S. brands.
Starbucks Malaysia denies the closure of more than 100 outlets, claiming only a few permanent closures.
The company has faced significant financial losses, reporting a net loss of RM91.5 million this year.
The boycott is part of a larger international movement protesting U.S. foreign policy in the Middle East.

Background of the Boycott

The boycott against U.S. brands, including Starbucks, has gained momentum in Malaysia and other countries, particularly in response to the humanitarian crisis in Gaza and Lebanon. Activists argue that consumer boycotts are a way to express discontent with U.S. foreign policy and its implications for civilians in conflict zones.

Starbucks Malaysia's Response

In light of the reports regarding store closures, Starbucks Malaysia has issued a statement refuting the claims. A company spokesperson clarified that:

Only a few locations have been permanently closed.
Most closures are temporary and part of a strategic review to align operations better.
No employees have lost their jobs; affected staff have been reassigned to nearby stores.

Financial Impact on Starbucks

The financial health of Starbucks Malaysia has been under scrutiny, especially after the company reported a significant net loss of RM91.5 million for the fiscal year ending June 30, 2024. This loss is attributed to:

A 35% drop in revenue, from RM1.1 billion to RM730.3 million.
The impact of the ongoing boycott, which has affected sales across various U.S. brands.

Competitive Landscape

Starbucks is not only facing challenges from the boycott but also from local competitors. New coffee franchises have emerged, with ZUS Coffee reportedly surpassing Starbucks in popularity among Malaysian consumers. This increased competition, coupled with the boycott, has put additional pressure on Starbucks to adapt its business strategy.

Conclusion

The situation for Starbucks in Malaysia highlights the complex interplay between consumer sentiment, international politics, and business operations. As the boycott continues to affect sales, the company must navigate these challenges while attempting to reassure its customer base and maintain its market position. The coming months will be crucial for Starbucks as it seeks to recover from financial losses and respond to the evolving landscape of consumer preferences in Malaysia.