Starbucks’ decision to inject itself into the refugee debate may be creating some problems for its business, according to analysts at Credit Suisse.
Since Starbucks Chief Executive Howard Schultz promised to hire 10,000 refugees over the next five years in response to President Trump’s initial executive order temporarily barring immigration from seven Muslim-majority countries, the coffee chain’s brand has taken a hit, the prestigious bank says.
Equity analyst Jason West wrote that the company experienced “a sudden drop in brand sentiment following announcement of the refugee hiring initiative on Jan. 29th.”
A YouGov BrandIndex tracker found a decrease of positive perception of the brand by two-thirds since Schultz’s announcement. The company’s stock price also hasn’t recovered, trading at $54.62 a share as of early afternoon Friday—down from a Jan. 25 high of $58.70.
Perhaps that’s because Schultz’s decision to prioritize the hiring of refugees led to a boycott by some Trump supporters. The #BoycottStarbucks hashtag began trending soon after the Schultz made his announcement and still remains fairly active on Twitter.
In his letter to employees, Schultz described his “confusion, surprise and opposition” to the president’s executive order. Schultz wrote:
We are living in an unprecedented time, one in which we are witness to the conscience of our country, and the promise of the American Dream, being called into question. These uncertain times call for different measures and communication tools than we have used in the past.
In another potential knock on Trump, Schultz reaffirmed his support for the Deferred Action for Childhood Arrivals (DACA) program. In the letter, Schultz said “coffee is what unites” the “common heritage” between the United States and Mexico. He also said he saw Starbucks as being “in business to inspire and nurture the human spirit, one person, one cup and one neighborhood at a time.”
Americans aren’t the only ones upset with Starbucks. In February, the company drew the scorn of locals in Milan, Italy, for planting 42 palm trees across from the world-famous Duomo cathedral. The spiky trees were lambasted as “kitsch” and right-wing politician Matteo Salvini accused Starbucks of helping create an “Africanized” Italy.