SCK Company, which operates Starbucks Korea, reported an operating loss in the second quarter of this year. Following consumer backlash over the 'Tank Day' marketing controversy in May, the absence of its summer promotion, 'Summer e-Frequency,' appears to have impacted its performance.
According to the second-quarter results announced by E-Mart on August 13, SCK Company recorded an operating loss of 18.4 billion won, a significant shift from an operating profit of 40.3 billion won during the same period last year, marking a decline of 58.7 billion won. Revenue fell to 747.3 billion won, down 6.1% compared to the previous year.
For the first half of the year, cumulative revenue reached 1.5651 trillion won, a slight increase of 0.5% year-on-year, but operating profit plummeted by 85.5% to 10.9 billion won from 75.4 billion won during the same period last year.
SCK Company identified the lack of the Summer e-Frequency event in June as a key factor behind its poor second-quarter performance. The Summer e-Frequency is a major summer promotion where customers who purchase specific beverages receive gifts. The cancellation of this event, which typically boosts customer visits and beverage sales, significantly affected second-quarter revenue.
Previously, Starbucks faced criticism for a tumbler promotion called 'Tank Day' on May 18, the anniversary of the Gwangju Uprising, which was perceived as disrespectful. Following the backlash, the company halted the promotion and issued an apology, resulting in the dismissal of the SCK Company CEO and a senior executive. Some consumers initiated a boycott, although the company did not directly attribute the decline in performance to the Tank Day controversy or the boycott.
Looking ahead, SCK Company aims to focus on restoring brand trust and stabilizing operations in the second half of the year. The company plans to revamp its quality control system by introducing checklists and artificial intelligence tools, along with establishing related organizational structures. It also intends to enhance its social contribution activities centered on preserving historical value and fostering community development.
Additionally, SCK Company will implement business strategies to recover revenue and improve profitability. This includes strengthening customer acquisition marketing centered on membership and seasonal strategies, as well as optimizing low-margin products within its portfolio. New store openings will be pursued with a focus on profitability. As of the end of the second quarter, the total number of stores reached 2,185, an increase of 49 compared to the same period last year.
A representative from Starbucks Korea stated, "The impact of halting marketing activities during the internal restructuring and follow-up measures has been reflected in our performance. Our top priority is to restore customer trust while continuing to engage in community development activities and enhancing product competitiveness to expand differentiated customer benefits and services."
* This article has been translated by AI.
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