Starbucks Reports First Dip in Customers

Customer traffic down at coffee-shop giant's US stores for the first time

By Marcia Greenwood, Newser Staff

Posted Nov 15, 2007 9:51 PM CST

(Newser) – Starbucks reported its first-ever decline in US customer visits today, reports Bloomberg. The coffee juggernaut lowered its profit and sales forecast, and shares of its stock fell 8.3%. The profit revision suggests that Starbucks is losing customers to McDonald's and Dunkin' Donuts, where a cup of coffee may cost $1 or less.

"The consumer is being faced with rising costs in every sector of their lives, and so part of that is reflecting on us," said CEO Jim Donald. Starbucks will begin running TV ads for the first time tomorrow to woo new customers to its stores. It also has added breakfast sandwiches, salads, and more pastry items to keep consumers from going to other chains.

[Images (5)]

[Videos (1)]

A coffee-drinker walks away from a Starbucks store in downtown Seattle, Tuesday, Nov. 13, 2007. With its affluent customer base and uncanny knack for drawing crowds, Starbucks Corp. has long seemed immune... (Associated Press)

More people are passing by Starbucks, and the coffee-shop giant is feeling the pinch. (Associated Press)

Other chains, such as McDonald's and Dunkin Donuts, which often sell coffee for less than Starbucks, may be part of the reason for Starbucks' slowdown. (Associated Press)

To better compete with Dunkin Donuts and McDonald's, Starbucks recently added more food items, including pastries, to its menu. (Associated Press)

Pedestrians and a dog walk past a Starbucks Corp. store in downtown Seattle, Tuesday, Nov. 13, 2007. With its affluent customer base and uncanny knack for drawing crowds, Starbucks has long seemed immune... (Associated Press)

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Starbucks Reports First Dip in Customers