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Why Is My Starbucks Out Of...CEO, President Explain Product Shortages

Some Starbucks cafes have been out of stock on some items, but CEO Kevin Johnson says it can be fixed.
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When you visit your local Starbucks (SBUX) - Get Starbucks Corporation Report, hoping to buy your favorite coffee, beverage or snack, it's disappointing when you find your desired purchase out of stock. 

That doesn't happen often, but it has been a more regular occurrence as the Seattle chain deals with changing customer habits and supply-chain issues -- both of which can be blamed on the pandemic.

The company has not shied away from acknowledging these problems. Group President North America John Culver even addressed the shortages during the company's fourth-quarter earnings call.

"We are seeing impacts and that's evident by some of the inventory levels in our stores, but I feel very good about the way in which we've been able to navigate it," he said. 

"Those supply impacts began in mid-fiscal '21 and we would expect that they will continue into this coming year."

Starbucks Calls the Shortages Temporary

The coffee chain is hardly unique in having supply-chain issues during the pandemic. Grocery stores, restaurants and retailers have struggled to meet demand, partly because of constrained supplies and sometimes because the pandemic has made forecasting demand a challenge. 

Starbucks acknowledged intermittent shortages in October in a statement it shared with the New York Times.

In a statement, a spokeswoman for Starbucks said the company was experiencing “temporary supply shortages” of some of its products. She said the shortages varied by location, with some stores experiencing “outages of various items at the same time.” She added that the company was working with its vendors to restock the items as soon as possible, and that the supply-chain issues had not affected prices.

Culver further explained the issue in his remarks.

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"And what we're seeing is headwinds on commodity pricing challenges around transportation and also the ability for our distributors and manufacturers to find labor to work in their factories and distribution centers," he added.

Starbucks CEO Says Progress Is Being Made

The pandemic disrupted normal patterns for Starbucks. With many of its customers working from home or going into the office some days but not others, purchasing patterns changed. 

That created new challenges for the company, but Chief Executive Kevin Johnson said during the fourth-quarter earnings call that steps to solve the underlying issues have been taken.

"We made significant progress addressing supply-chain issues and experienced an overall improvement in inventory availability as we move through the quarter by increasing production at existing suppliers, onboarding new suppliers and strategically prioritizing key holiday and Q1 merchandise," he said.

Johnson did say that further problems could come up, especially as demand increases.

While we made significant progress addressing supply-chain challenges as fiscal 2021 progressed, we remain cautious and vigilant as we enter fiscal '22 given the dynamic nature of the situation. The recovery in Q4 surged forward as evidenced by the sequential acceleration of two-year comp growth. We exited Q4 with even stronger 14% two-year comp growth in September and closed to a record average ticket, driven by the strength of our fall beverage lineup, a shift in customer behavior toward more premium beverages and strong food attach.

Starbucks did not immediately respond to a request for comment. Shares in the coffee chain are up roughly 11% year to date.