Starbucks Facing Supply Chain Shortages

Will Kreznick

Starbucks stores nationwide are reportedly running short on products as the labor shortage continues to takes its toll at the store and supply chain levels. The coffee giant is having issues with such items as cups, coffee syrups, cake pops, cup stoppers, and mocha flavoring, according to the Wall Street […]

Starbucks stores nationwide are reportedly running short on products as the labor shortage continues to takes its toll at the store and supply chain levels.

The coffee giant is having issues with such items as cups, coffee syrups, cake pops, cup stoppers, and mocha flavoring, according to the Wall Street Journal. A spokeswoman told the media outlet that Starbucks temporarily removed oat milk and drinks made with oatmilk from the app until the inventory is replenished. The brand is also pausing production on some lower-sales items to focus on higher-selling ones, a source told the Journal. In late April, CEO Kevin Johnson told analysts that  the brands Iced Brown Sugar Oatmilk Shaken Espresso far exceeded expectations in the quarter and pushed year-over-year growth of 53 percent in “dairy” beverage sales.

In a message on the app, the company said, “Due to current supply shortages, some of your favorites may be temporarily out of stock. We’re sorry for the inconvenience.” The shortages vary by market and store, and some locations will experience outages of various items at the same time, a Starbucks representative told Yahoo Finance. It’s to the point that some workers are serving drinks in differently sized cups when others aren’t available.

“We apologize for the inconvenience and are working quickly and closely with our supply chain vendors to restock items as soon as possible,” the chain said to Yahoo Finance. “Oat milk is an example of the handful of outages customers may experience when visiting their local Starbucks. A good reminder/tip, is the Starbucks app is a resource for item availability.”

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Starbucks isn’t alone in the struggle. Quick-service counterpart Chick-fil-A made headlines last month when it had issues with its sauces. The brand posted on its website that “Due to industrywide supply chain shortages, some items, like sauces, may be unavailable. We apologize in advance for any inconvenience.”

The scarcity of labor and supplies have caused commodity prices to significantly increase. To put the issue into perspective, the number of job openings across the U.S. reached a record-high 9.3 million on the final business day of April, according to the Bureau of Labor Statistics. The data is part of the agency’s monthly Job Openings and Labor Turnover Survey. April was the highest amount since the series began in December 2000. At the same time, the price of beef (14.5 percent), pork (9.6 percent), fresh fruits and melons (9.3 percent), processed poultry (5.4 percent) and dairy products (3.2 percent) all increased between March and April of 2021, the agency reported. 

The chicken category in particular has been hit in a major way. Using data from market research firm Urner Barry, the Journal reported in early May that boneless chicken breast was trading at $2.04 per pound compared to roughly $1 per pound last year. The average price is approximately $1.32 per pound. The NPD Group said servings of wings in the fast-food sector soared 33 percent in the 12 months ending March, compared to the same period last year.

Similar to Starbucks and Chick-fil-A, Smokey Bones warned that its virtual brand The Wing Experience may run short on traditional wings at times. Also, KFC told operators in April to remove chicken tenders and Nashville Hot chicken items from online menus because of supply issues, the Journal reported.

The supply issues are hampering Starbucks as sales continue to surge. The chain’s U.S. same-stores grew 9 percent in Q2 after dropping by 5 percent in the previous quarter.  

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