Nam Hyun-woo has worked as a staff writer at The Korea Times since 2013, mostly covering business and politics. He currently belongs to the Business Desk where he covers topics such as emerging tech, AI, ICT and Korea's chaebol community. Prior to joining the team, he was the paper's correspondent for the presidential office of Korea during the Yoon Suk Yeol and Moon Jae-in administrations.
Starbucks Korea sinks into loss after 'Tank Day' promotional fiasco
An employee cleans up at a Starbucks outlet in central Seoul, on June 22, when Shinsegae Chairman Chung Yong-jin and Starbucks Korea officials attended a special lecture on Korean history in a gesture of apology for its controversial promotion event. Korea Times phoyo by Shim Hyun-chul
By Nam Hyun-woo
Starbucks Korea operator SCK Company has swung to an operating loss in the second quarter, following a controversial promotional event that drew nationwide criticism for allegedly insulting victims of the bloody crackdowns on major pro-democracy uprisings in the 1980s, prompting some consumers to launch boycotts.
During an earnings call Thursday, Emart, which operates SCK Company, said the coffee chain posted an operating loss of 18.4 billion won ($13 million) in the second quarter, swinging from 40.3 billion won of operating profit a year earlier. During the same period, net sales declined 6.1 percent to 747.3 billion won.
The company attributed the loss to the absence of its Summer Frequency promotional event in June, but did not cite worsening consumer sentiment toward the brand or boycott attempts as factors.
Starbucks Korea came under fire after it launched a promotion campaign for its tank-style tumblers, designating May 18 as “Tank Day.” The date marks the anniversary of the 1980 Gwangju uprising, when pro-democracy demonstrators were brutally suppressed by military forces using tanks under Chun Doo-hwan’s military junta.
Shinsegae Group Chairman Chung Yong-jin apologizes for a controversial marketing campaign by Starbucks Korea at a press conference at Josun Palace hotel in Gangnam District, Seoul, May 26. Korea Times photo by Shim Hyun-chul
The ad also used a phrase that translates into English roughly as “Put it on the table with a 'tak!'” The phrase echoes the infamous explanation given by police in the torture death of student activist Park Jong-chul in 1987, claiming that “he died with a gasp as we smacked the desk.” The remark, which used the Korean onomatopoeia "tak" for the sound of a smack, later became a major catalyst for Korea’s democracy movement.
Following the controversy, Starbucks Korea replaced its CEO and scaled back promotional events. Shinsegae Group Chairman Chung Yong-jin publicly apologized and promised to attend a special lecture on modern Korean history. However, the backlash continued, with consumers launching boycott campaigns and the incident becoming a political issue.
During the earnings call, the company said SCK Company will implement measures to restore the Starbucks brand in the second half, including overhauling its review process by introducing checklists and artificial intelligence tools. It also plans to strengthen its social contribution activities, including efforts to preserve history and promote cooperation with local communities.
Due to SCK Company’s operating loss, Emart also posted an operating loss of 43 billion won on a consolidated basis, even though its standalone operating profit rose 64 percent to 25.6 billion won.
The second-quarter earnings result of Emart subsidiaries