The so-called "Tank Day" controversy at Starbucks Korea, criticized for making light of the May 18 pro-democracy movement, has been spreading for five days. A Starbucks boycott is growing centered on Gwangju, and the mobile coupon issuance business has begun to be disrupted. Demands are pouring in for Chung Yong-jin, chairman of Shinsegae Group, to step down, and the situation has escalated to a police investigation.
Shinsegae Group and Starbucks Korea, as soon as they recognized the controversy, dismissed the Starbucks Korea CEO and an executive and issued a public apology in the name of the chairman, but the controversy is not expected to subside easily. This is because it has not been revealed who did this and why. Citing an internal audit, Shinsegae Group and Starbucks Korea are keeping quiet about the background and circumstances of the incident, which is causing "labor-labor conflict" within Starbucks Korea.
◇ Starbucks Korea keeps mum on the full story, citing an audit
According to the retail industry on the 22nd, Starbucks Korea on the 18th removed the commerce team from its organization chart for making light of the May 18 pro-democracy movement with its "Tank Day" event (promotion). Starbucks Korea said this was to prevent secondary harm to individuals before the full story had emerged.
However, there is discontent among employees working in Starbucks stores who deal with customers. The thrust is that the company is protecting those who threw it into the vortex of controversy while offering no consideration for front-line staff.
Officially, Starbucks Korea has only said that rumors such as a six-month employee drafting the proposal or all Head of Team positions being reassigned to the provinces are not true. Only the dismissals of CEO Son Jeong-hyeon and the planning executive, and the removal from duties of the part leader and Head of Team, have been confirmed.
There is also internal backlash over remarks at a recent town hall meeting held for headquarters support center staff to stabilize the organization, where an executive said in effect, "I believe it was not done intentionally." Critics say the comment appears to dilute responsibility for distorting history.
The dismissed CEO and executive are also holding back from speaking. Even if they were unaware of the problematic event, they were on the approval line, leaving them facing a situation where not knowing is itself a problem. Some, however, note that because they were dismissed without time to grasp the incident, it will be harder to learn the exact inside story. The dismissed executive will likely stay silent, and the investigation into the working-level staff may well end on the note that they "didn't know."
◇ Government offices and corporations turn away from doing business with Starbucks amid the boycott
As the controversy intensifies and the audit results are delayed, Starbucks Korea's business is also taking a hit. Beyond the consumer boycott, the very B2B (business-to-business) business in which corporations buy mobile gift certificates in bulk is being heavily affected. Corporate sales of mobile gift certificates and the like account for around 10%–15% of Starbucks Korea's total revenue.
The Ministry of the Interior and Safety expressed its intention to boycott Starbucks. Minister of the Interior and Safety Yoon Ho-jung said on the 21st on X (formerly Twitter), "Government agencies, including the Ministry of the Interior and Safety, have used mobile gift certificates such as coffee vouchers for various surveys, contests, and public participation events," adding, "We express deep regret over the anti-historical behavior of Starbucks Korea, which recently caused a stir. From now on, we will not provide products from corporations that make light of the history of democracy and social values or use them as commercial material." As a result, the use of Starbucks products or gift certificates is expected to plummet at government-run events and programs under the Ministry of the Interior and Safety and its affiliated institutions. In addition, the Korea Tourism Organization (KTO) and the National IT Industry Promotion Agency (NIPA) under the Ministry of Science and ICT have changed event prizes from Starbucks coupons to other coffee brands.
The mood is similar in the private sector. NH Nonghyup Bank decided to change the prizes for its "Confident match prediction" event, run in collaboration with the NC Dinos pro baseball club from the 18th through the 28th, from Starbucks beverage coupons to A TWOSOME PLACE Americano coupons. A corporate official said, "When we did small marketing events, we chose Starbucks mobile coffee coupons thinking they would be relatively uncontroversial, but now we are looking for alternatives."
◇ Aggressive marketing to boost sales and owner risk fanned the flames
Marketing copy or mockups that spark social controversy have in the past plunged many corporations into crisis. Shinsegae Group swiftly dismissed the CEO and posted an apology, yet the controversy continues to spread.
Inside and outside Starbucks Korea, many see two main reasons. First, Starbucks Korea engaged in excessive marketing activity. To overcome a recent sales slowdown, Starbucks Korea increased its lineup of specialty drinks and foods and expanded goods. With departments planning marketing separately and approvals granted according to scale, confusion often arose on the store floor, which actually had to run the campaigns.
According to the Starbucks board viewed by all employees, it was common for the initial event notice to go out and then be followed by successive revisions and addenda. This resulted from pushing ahead with events before final coordination and then patching things up temporarily when problems arose. A Starbucks Korea official said, "There is virtually no control tower that keeps track of how many events are underway as of a particular date."
There is also criticism of the recent conduct of Shinsegae Group Chairman Chung Yong-jin. In 2022, Chung sparked controversy by posting "eradicate communism" and photos of beans on his personal social media. While this is a slogan rooted in the anti-communist ideology of the conservative camp, it became tied to the far-right-leaning community "Ilbe (Ilgan Best)," tending to be consumed as an ideological controversy or a kind of political game. More recently, he appeared to maintain close ties with "MAGA (Make America Great Again)" figures in the United States, including Donald Trump Jr. Many assess MAGA figures as close to the far right on the U.S. political spectrum. This is also why the current situation is becoming a political flashpoint ahead of the nationwide local elections on Jun. 3.
A retail industry official said, "Coupang, a U.S.-listed company, is also active in lobbying the United States, including MAGA figures, but Coupang works 'under the surface' according to principles of government relations. Chairman Chung, however, openly flaunted his connections," adding, "Such displays of political leanings or ties can give business momentum but can also boomerang." Meanwhile, on May 18, when the controversy erupted, Chung was in the United States and made an emergency return. There are reportedly no plans yet for a visit to Gwangju.