Starbucks' brand gets whacked after bias incident

Starbucks has crafted a brand focused not only on coffee, but also on living up to progressive ideals. Now, that brand image is taking a hit following a racial bias incident at one of its stores. 

Fewer consumers say they're as likely to buy food or drinks at Starbucks (SBUX) following the incident, according to new data from YouGov BrandIndex, a service that tracks brand perception. Last week, a Philadelphia store manager had two black men arrested when they refused to leave after using the store's restroom without making a purchase.  

The backlash from the incident -- which has sparked protests and apologies from its CEO -- caused the company's consumer perception to drop to its lowest since November 2015, when the chain got criticized for replacing a symbol-filled holiday cup with a simple red design. About 25 percent of consumers surveyed said they would consider making a purchase at Starbucks on Tuesday, compared with 28 percent on Friday. 

Buzz about Starbucks has also dropped into negative territory, YouGov found. Its "Buzz score," which is based on whether consumers say they've heard anything positive or negative about a brand, fell from 13 to -8 on Tuesday.   

"There might be some people who are passing by a Starbucks and might keep going, whereas before they might have stopped in," said Ted Marzilli, chief executive officer of data products at YouGov.

It's possible the impact will be short-lived, especially if no other incidents occur that mirror the racial bias of the Philadelphia arrest. However, another alleged incident of racial bias emerged in Los Angeles, when a black man claimed he was denied access to a bathroom at a Los Angeles store in January, even though a white man was given the entry code. Neither were paying customers.

"It's interesting and ironic this is happening at Starbucks, because it's been at the forefront of progressive causes," Marzilli noted. "It was very same-sex-marriage friendly," and its customers tend to say they believe society is "much better" when people of different races live in the same neighborhood or community.

By hitching itself to a progressive image, Starbucks may cause consumers to be more critical of it because they're likely to expect actions that match its rhetoric. "There's some sense of betrayal," Marzilli said.

Starbucks said it will close all of its stores on May 29 for racial bias training, which could cost the company about $7 million in lost sales. 

"The onus is on Starbucks to follow through with things its CEO talked about," Marzilli said. "The store closing is a manifestation of that, but the downside is the end of May is a long way away. That's a lot of time for people to fill out that space with another narrative before Starbucks can implement that day of training."