☕️ Not so fast

Why Starbucks is struggling... May 04, 2024 [View Online]( | [Sign Up]( | [Shop]( [Morning Brew]( PRESENTED BY [Pendulum]( Good morning. May The Fourth Be With You. It’s Star Wars Day, a celebration of the popular film series, Star Wars. —Cassandra Cassidy, Matty Merritt, Sam Klebanov, Abby Rubenstein, Neal Freyman MARKETS Nasdaq 16,156.33 +1.99% S&P 5,127.79 +1.26% Dow 38,675.68 +1.18% 10-Year 4.500% -7.1 bps Bitcoin $62,767.75 +6.23% Amgen $311.29 +11.82% Data is provided by *Stock data as of market close, cryptocurrency data as of 2:00am ET. [Here's what these numbers mean.]( - Markets: Stocks [climbed up]( like a squirrel that just noticed your dog approaching, with last month’s jobs data convincing investors that JPow might be in a rate cutting mood soon. Apple soared following its announcement of a massive share buyback plan after the bell on Thursday, and Amgen had its best day since 2009 when its CEO suggested it was making progress on a weight loss drug.  FOOD & BEV [The biggest name in coffee is facing headwinds]( [Illustration of a Starbucks cup spilling coffee]( Castro Everyone may be listening to “Espresso,” but they’re not buying it…at least not from Starbucks. The coffee company known for consistently outperforming itself reported less-than-spectacular earnings this week, sending its stock plunging 12% Tuesday evening on the news—nearly as much as when the company shut all its doors during Covid. For the first time since 2020, US same-store sales [declined]( falling 3% alongside a 7% decrease in foot traffic. Meanwhile, revenue fell 1.8% to $8.56 billion as sales in China—the chain’s second-biggest market—declined 11%, and Starbucks lowered its sales outlook for the year. Why is it struggling? CEO Laxman Narasimhan blamed inflation pressures, cautious customers, and other factors like bad weather (sure). In international markets, executives pointed to growing competition and boycotts in the Middle East that have halted traffic. Starbucks may also be a victim of its own success (or, less charitably, its inefficiencies) because it noted large numbers of caffeine hounds [abandoning]( their app orders before finalizing transactions during the morning rush due to long wait times and out-of-stock products. But mostly, China While declining US sales are bad, it’s China’s sharp decline that has investors worried. Ex-CEO Howard Schultz called the country Starbucks’s most important market in 2022, and the corporation has bet big on growth there. But even with more than 7,000 locations and the cutting-edge innovation that is a braised-pork flavored [latte]( competition is fierce: - Chinese chains Luckin Coffee and Cotti Coffee claim to have twice as many stores as Starbucks in the country. - Other international chains, including KFC, McDonald’s, and Tim Horton’s, offer cheaper coffee. What’s next? Shareholders are hoping Starbucks’s plan for [recovery]( is better than the name for it. Dubbed the “Triple Shot Reinvention with Two Pumps,” it includes a new pilot program to serve customers from 5pm to 5am and in-app promotions and upgrades to cut down on wait times.—CC PRESENTED BY PENDULUM [Meet this un-hunger hormone]( [Pendulum]( Feeling an overwhelming urge to indulge? Looking for a little balance and moderation in your daily diet? You’ve gotta know about Pendulum’s [GLP-1 Probiotic](. This breakthrough supplement contains gut-loving bacteria that helps curb cravings for foods that leave you feeling…blah. Don’t take our word for it: In a survey of 274 consumers, 91% saw a noticeable decrease in overall food cravings, especially sugary and carb-laden treats. Ready to invest in your health and take charge of unwanted cravings? Try GLP-1 Probiotic and [get 20% off your first month with Pendulum](. WORLD [Tour de headlines](#) [Warren Buffett]Paul Morigi/Getty Images It’s “Woodstock for capitalists” time again. Normally, the best reason to go to Omaha is to chow down on some runzas, but today, it’s to see Warren Buffett preside over his 60th [shareholder meeting]( since taking the reins at Berkshire Hathaway in 1965. It’s expected to be more somber than usual since it’ll be Buffett’s first since his No. 2, Charlie Munger, died. Investors will be watching to size up Buffett’s chosen successor, hear how BH plans to deploy its heaping pile of cash, see what Buffett thinks of inflation and Apple, and maybe even discover the firm’s big [mystery bet](. If you’re not in Omaha, you can catch the Q&A on CNBC. 🧊 A cooling labor market raises hopes for a Hot Rate Cut Summer. The latest Labor Department data shows the US [added]( 175,000 jobs in April, way less than the 300,000 added in March and also less than economists expected. Meanwhile, the unemployment rate ticked up to 3.9% from 3.8% in March, and wages rose less than anticipated. All that bad news for working stiffs was music to the ears of investors who are holding out hope that the Fed might still cut interest rates this summer despite most recent economic data showing that inflation is sticking around. Congressman and wife accused of taking $600,000 in bribes. Rep. Henry Cuellar, a Democrat from Texas, and his wife were [indicted]( on bribery, conspiracy, and other charges yesterday. The Justice Department claims the couple took money from an Azerbaijan-controlled energy company and a Mexican bank in exchange for advancing the interests of the former Soviet republic and the financial institution. Cuellar, however, told news outlets that he and his wife are “innocent of these allegations” and vowed to continue running for reelection in November. SPORTS [Kentucky Derby horses aren’t getting any faster]( [Sprinter running in top half, race horse running in bottom half.]( Alex Castro, Photos: Getty Images Today, over 160,000 spectators donning view-blocking hats and loud pattern combinations will descend on Churchill Downs and watch 20 horses run for at least two minutes. There’s a chance the winning horse will take a few seconds longer to cross the finish line, but it’s [unlikely]( it will finish sooner. The legendary horse Secretariat still holds the record for the fastest Derby ever, clocking in at 1:59.4, from 1973. Winning horse times have stayed pretty stagnant for the last 50+ years. A couple reasons why we likely won’t see a one-minute race: - The Derby’s outcome relies heavily on weather conditions. The ideal climate for a race day is hot and dry, but rain has attended the Derby more often, and thunderstorms are predicted for this evening. - A 2008 study found thoroughbreds may have hit their peak physicality. Decades of selective breeding have led to 95% of the breed descending from a single Arabian horse. Meanwhile, on a different track…human runners are smashing records faster than you can say mint julep. The men’s 100m world record has been met or beaten 20+ times since 1973. Chalk it up to better advancements in training equipment, nutrition, and humans’ willingness to do [just about anything]( to get ahead.—MM FROM THE CREW [The Crew]( Morning Brew is partnering with Scott Galloway’s Section to bring you the AI Crash Course, a 10-day deep dive into AI. In just over a week, you’ll learn to write effective prompts, set up your “AI workspace,” audit your workflows, and start using AI for basic use cases. You’ll also get dedicated office hours with an AI expert and a suite of AI resources you can take with you. [Enroll now and get 20% off with our exclusive code: BREW20](. ENTERTAINMENT [Debunking Seinfeld’s alternative Pop-Tart history]( [Seinfeld pop tart movie]( J. Brown/Getty Images Jerry Seinfeld made a movie about something: Pop-Tarts. His directorial debut, Unfrosted, premiered on Netflix yesterday. The film is inspired by a [standup bit]( in which Seinfeld lovingly roasts the sugary slabs that filled his childhood with empty calories. It recounts a very fictional and irreverent interpretation of Kellogg’s creation of Pop-Tart while spoofing brand-origin movies like [Flamin’ Ho]( The Founder, and Barbie. Since the film received a reception from [most critics]( about as warm as a frozen Pop Tart, here’s our version of the story with the zaniness removed. How the Pop-Tart actually originated In the 1960s, Post Consumer Brands was beating Kellogg in the race to create a jam-filled toastable that didn’t spoil at room temperature. But the stars ultimately aligned for Kellogg like they did for Jerry and Larry in the ’90s, thanks to clever marketing. - The company quickly pulled ahead by inventing the Fruit Scone. - Following a prudent rebranding to “Pop-Tart” and a flurry of colorful ads aimed at youth that fueled a blockbuster release, Kellogg ran a thinly veiled newspaper ad apologizing for running out of the snack, which created more hype. Adding frosting a few years later further cemented its place in America’s pantries. Pop-Tarts remain a sales MVP…with 3 billion sold in 2022.—SK GRAB BAG [Key performance indicators](#) [Seals on Pier 39 at the Wharf in San Francisco]Anadolu/Getty Images Stat: It’s not unusual for tourists to descend on San Francisco for its food scene, but the city’s recent visitors are a lot more prone to barking than the type that posts every meal on Insta. That’s because they’re [sea lions](. According to Pier 39 harbormaster Sheila Chandor, more than 1,000 of the creatures, the most seen in the last 15 years, arrived this week to munch on a large school of anchovies. Chandor told the AP, “They are fueling up for the mating season. It’s spring. They are ready to rock and roll down in the Channel Islands, and we’re a nice pit stop with some great seafood.” Quote: “I had a good sense to believe this was going to be a massive story and that it was going to dominate the news cycle for the next several days.” Hope Hicks, a former spokesperson for Donald Trump ​​who was once considered one of his closest confidants, took the stand in the former president’s hush money trial yesterday and delivered [emotional testimony]( about her time working on his campaign—including when the infamous Access Hollywood tape came out. Hicks said she was a “little stunned” by the tape and knew it was going to be big news. Still, Hicks praised Trump and said of his former lawyer Michael Cohen, whom Trump claims went rogue to pay off Stormy Daniels, “He liked to call himself ‘Fixer’ or ‘Mr. Fix-it.’ And it was only because he first broke it.” Read: How private equity shapes a ski town. ([Harper’s Magazine]( NEWS [What else is brewing](#) - [Canada]( arrested three men it claims murdered a prominent Sikh separatist last June, a killing that Prime Minister Justin Trudeau publicly accused India of masterminding. - [Grad students]( at the University of Pennsylvania voted to join the UAW in a 1,807–96 vote, creating what the union says will be the largest private sector union in Philadelphia in half a century. - [An Illinois lawmaker]( filed a bill to block Dave & Buster’s plan to allow betting on its arcade games. - [China]( launched a rocket to collect samples from the dark side of the moon as it competes with US space exploration. And on Monday, [Boeing]( plans to launch its first crewed space flight as it tries to take on SpaceX. RECS [Saturday To-Do List graphic] Imperial bailout: An econ professor [breaks down]( the status of the Galactic financial sector after the Death Star blew up. Watch: A sliding door that sounds like [R2-D2](. From prank to product: The story of the [Tauntaun sleeping bag](. Not Star Wars: A classic [mint julep]( recipe for Derby Day. Reinvent pleasure: Reach a new crescendo every night with the doc-recommended vibrator that’s clinically proven to [improve arousal](. Multishape flexibility helps stimulate multiple erogenous zones. [Get 20% off a new vibe]( *A message from our sponsor. GAMES [The puzzle section](#) Brew crossword: Today’s Star Wars-inspired crossword is best enjoyed with a cold glass of blue milk. [Play it here](. Open House Welcome to Open House, the only newsletter section still trying to find a place to park in downtown Omaha to catch Buffett’s keynote. We’ll give you a few facts about a listing and you try to guess the price. [Giant home in Omaha, Nebraska with pool and outdated, 2000s-era design.]Zillow Today’s 6,033-square-foot [home]( is in Omaha, Nebraska, and despite its high price tag, its decor will never let you forget you still live in the Midwest. The home has a gorgeous saltwater pool, built on the top of a small hill so you can splash around and enjoy your view of…the rest of your yard. Amenities include: - 4 beds, 6 baths - Rock walls inside and out - Grand wooden entryway How much to be your own oracle? SHARE THE BREW [Share Morning Brew]( with your friends, acquire free Brew swag, and then acquire more friends as a result of your fresh Brew swag. We’re saying we’ll give you free stuff and more friends if you share a link. One link. Your referral count: 0 [Click to Share]( Or copy & paste your referral link to others: [morningbrew.com/daily/r/?kid=4904f90a]( ANSWER $1.7 million Word of the Day Today’s Word of the Day is: stagnant, meaning “not advancing or developing.” Thanks to Elaine from Charleston, SC, for pushing us forward with the suggestion. Submit another [Word of the Day here](. Written by [Neal Freyman]( [Abigail Rubenstein]( [Cassandra Cassidy]( [Matty Merritt]( and Sam Klebanov Was this email forwarded to you? Sign up [here](. Take The Brew to work - Marketers: [Marketing Brew]( - Corporate: [CFO Brew](  [HR Brew]( - Tech: [IT Brew](  [Tech Brew]( - Retailers: [Retail Brew]( - Healthcare: [Healthcare Brew]( Get smarter in just 5 minutes - Money & Career: [Money With Katie](  [Bossy]( Interested in podcasts? - Check out ours [here]( [ADVERTISE]( // [CAREERS]( // [SHOP]( // [FAQ]( Update your email preferences or unsubscribe [here](. View our privacy policy [here](. Copyright © 2024 Morning Brew. All rights reserved. 22 W 19th St, 4th Floor, New York, NY 10011