Alsea sees falling Starbucks sales in Europe offset by strong South America trading

A Starbucks store in Amsterdam, the Netherlands | Photo credit: Lennart Schulz

Unfavourable customer sentiment towards Starbucks in Europe has negatively impacted Alsea’s earnings for a second consecutive quarter. 
 

The Mexican quick-service hospitality group, which licenses 1,825 Starbucks stores across 12 markets in Latin America and Europe, said an ongoing ‘boycott of American brands’ due to their perceived stances on the war in Gaza contributed to a 10% year-on-year fall in Starbucks sales in Europe during the three months ending 30 June 2024. 

Consumer boycotts were particularly acute in France and the Netherlands, where Alsea operates 252 and 101 Starbucks stores respectively, the group said in an earnings statement.  

However, despite lower Starbucks sales in Europe, Alsea said total Starbucks like-for-like sales during the quarter increased 7% with new outlets in Mexico and robust coffee segment sales growth in South America offsetting pressures in Europe.  

Alsea posted 8.7% like-for-like Starbucks sales growth in Mexico – its largest market with 844 Starbucks stores – and 27% in South America, where it operates 387 outlets across Argentina, Chile, Colombia, Uruguay and Paraguay. 

The quick-service hospitality group, which also operates licensed Domino’s Pizza and Burger King outlets across Latin America and Europe, opened 33 net new Starbucks stores in the second quarter, including 14 in Mexico, nine in France and four in Chile.  

Alsea achieved 2.3% year-on-year group sales growth to reach ₱19bn ($1.04bn), with total like-for-like sales increasing 9%. 

The Mexico City-based group also faced higher operating costs and unfavourable currency exchange rates in Mexico during the quarter which contributed to a 67% fall in net profit from ₱475m ($26m) to ₱157m ($8.6m). 

There have been widespread reports of consumers boycotting Starbucks and other US brands, including McDonald’s and Coca-Cola, due to their perceived stance on the Gaza conflict.  

Responding to an investor question in April 2024 about the impact of the Gaza conflict on Alsea’s European business, CEO Armando Torrado confirmed that Starbucks sales in Europe declined after Israel began military action in Gaza on 7 October 2023. 

In January 2024, Starbucks CEO Laxman Narasimhan said ‘misperceptions’ about the coffee chain’s position on the conflict was having a ‘significant impact on traffic and sales’ for its stores in the Middle East and had also led to a ‘softening’ of US traffic. 

Negative consumer perceptions have also negatively affected Starbucks’ Malaysian licensee Berjaya Food, which reported a third consecutive fall in quarterly sales and profits in May 2024 amid sustained customer boycotts of Starbucks stores in Southeast Asia.