Berjaya Food sees Starbucks sales slump amid Middle East stance controversy

A Starbucks store at Miri Airport, Sarawak | Photo credit: Zeq Qayong

Malaysia’s Berjaya Food has reported a significant fall in second quarter sales and profits amid as consumers stayed away from its 400 Starbucks stores over perceptions on its Middle East stance.
 

The Selangor-based restaurant group posted a 38% year-on-year decline in sales to RM182.5m ($38.2m) alongside a pre-tax loss of RM39.81 ($8.3m) – compared to a profit of RM52m ($10.9m) in the second quarter of 2022. 

In an accounts filing, Berjaya Food said the fall in revenue was primarily due to a ‘boycott in relation to the conflict in the Middle East’ amid the ongoing Israel-Gaza conflict. Selling its entire equity interest in Jollibean Foods Pte Ltd was also cited as a contributor to the pre-tax loss. 

Following the release of its results, Starbucks Malaysia moved to dispel ‘false statements’ about its business in a blog post titled ‘Starbucks on the record’. 

“Despite false statements spread through social media, we have no political agenda.  We do not use our profits to fund any government or military operations anywhere. Our position remains unchanged. Starbucks stands for humanity. We condemn violence, the loss of innocent life and all hate and weaponised speech,” the group said. 
 

Berjaya Food partnered with US coffee giant Starbucks and opened its first store in Kuala Lumpur in December 1998. The restaurant group also operates Paris Baguette in Malaysia and Singapore, as well as restaurant chain Kenny Rogers Roasters.  

Lower half-year sales are likely to negatively impact Berjaya Food’s full-year results. The group’s revenues for the six months ending 31 December 2023 are 20% below the corresponding period of 2022 at RM461m ($96.5m), with total loss for the year to-date at RM11.5m ($2.4m). 

However, the group expects its operating performance to show improvement in the third and fourth quarters. 

“The board believes that the operating performance will rebound and regain momentum, viewing the current situation as short-term and anticipating positive progress going forward,” Berjaya said in the filing. 

In January 2024, Seattle-based Starbucks highlighted heightened tensions in the Middle East as having ‘significant impact on traffic and sales’ for its stores in the region. ‘Misperceptions’ about the coffee chain’s position on growing tensions in the region had also led to a ‘softening’ of US traffic in its first quarter, according to CEO Laxman Narasimhan.   

The US coffee giant has sought to counter what it describes ‘false statements spread through social media’ over its position on the Israel-Gaza conflict.  
 

“Our position remains unchanged. Starbucks stands for humanity. We condemn violence, the loss of innocent life and all hate and weaponised speech,” the chain said in a statement late last year.