Starbucks Korea Reclaims Coffee Chain Lead After Five-Month Slump
Estimated card spending at Starbucks Korea rose for a third consecutive month in September, allowing the chain to overtake Twosome Place after a prolonged consumer backlash.
Starbucks Korea returned to the top of the country’s coffee chain market in September, according to estimated card-spending data, ending a five-month period shaped by consumer backlash and a sharp decline in business performance.
Market tracker IGAWorks estimated that credit and debit card spending at Starbucks Korea reached 121.08 billion won, or about $90.1 million, last month. That was a 4.3 percent increase from August and put the chain ahead of Twosome Place, whose estimated spending fell 6.4 percent to 110.5 billion won. The gap between the two brands stood at about 10.58 billion won.
The latest figures mark the third consecutive monthly increase for Starbucks Korea. Estimated card spending fell by 13.13 billion won between April and May, reaching 121.19 billion won in May, before declining further to 100.39 billion won in June. It then recovered to 110.06 billion won in July and 116.12 billion won in August. September was the first month since the downturn that the figure again exceeded 120 billion won.
The slump followed controversy over a promotion tied to May 18, the anniversary of the 1980 Gwangju Uprising. Starbucks used the phrase “Tank Day” in marketing for tumblers, prompting criticism that the campaign was insensitive to victims of the military crackdown and leading to boycott calls.
Shinsegae Group, the parent of Starbucks Korea operator SCK Company, subsequently dismissed the operator’s chief executive. Shinsegae Chairman Chung Yong-jin also issued a public apology. Starbucks Korea suspended summer promotional events and delayed product launches before gradually restarting marketing activity in June and July.
The controversy also coincided with a significant deterioration in SCK Company’s quarterly results. The operator posted an operating loss of 18.4 billion won in the second quarter, reversing an operating profit of 40.3 billion won a year earlier. Quarterly sales declined 6.1 percent to 747.3 billion won.
September was softer for other major coffee chains as well. Estimated card spending at Mega MGC Coffee fell 3.2 percent from August, while Paik’s Coffee recorded a 6.4 percent decline.
The IGAWorks figures provide a snapshot rather than a complete measure of revenue because they cover estimated credit and debit card transactions. Payments made through other methods are not included. Even with that limitation, the sustained three-month rebound indicates that Starbucks Korea regained spending momentum after the marketing crisis and restored its lead over a major domestic rival.