Starbucks franchise in Malaysia suffers massive losses amid protests

In Malaysia, the performance of Berjaya Food, which operates the Starbucks franchise, has significantly deteriorated. For the financial year that concluded in June, the company reported a net loss of 292 million ringgit, a drastic increase from the previous year's loss of 91 million ringgit, indicating a sharp decline in financial health. The revenue also plummeted, falling by 64% to 477 million ringgit, attributed to a decline in customer visits linked to ongoing protests related to the Gaza conflict that have altered consumer spending behavior. The ongoing protests have created an atmosphere of discontent, negatively impacting various businesses including Starbucks outlets. The closure of some stores caused the total number of Starbucks locations in Malaysia to decrease from approximately 408 in June to around 320. This trend shows the profound connection between political sentiments and business performance, especially in sectors reliant on consumer discretionary spending. Despite the setbacks, Berjaya Food is exploring ways to stabilize its business. The company intends to diversify its business operations both locally and internationally. For instance, they secured franchises to operate Starbucks stores in Denmark, Finland, and Iceland in August 2024 while consolidating existing stores within Malaysia to strengthen their core operations. This strategic pivot reflects an effort to adapt to market changes and emphasize sustainable growth despite external challenges. Vincent Tan, the owner of Berjaya Food and a notable Malaysian tycoon, possesses a wealth portfolio encompassing various industries such as financial services, retail, and real estate. Despite experiencing losses in his property outfit, Berjaya Land, Tan's net worth remains significant at approximately $770 million. These strategic decisions and financial maneuvers will be crucial for Berjaya Food as it seeks to recover from these unprecedented losses while navigating a complex market influenced by socio-political factors.