The so-called "Tank Day" controversy at Starbucks Korea, accused of making light of the May 18 Democratization Movement, has been spreading for four days. A boycott of Starbucks is expanding, centered on Gwangju, and the mobile coupon issuance business has begun to face disruptions. Demands are pouring in for Chung Yong-jin, chairman of Shinsegae Group, to step down, and the situation has grown to the point of a criminal probe.
Shinsegae Group and Starbucks Korea dismissed the CEO and an executive of Starbucks Korea as soon as they recognized the incident and issued a public apology in Chairman Chung's name, but the controversy is unlikely to subside soon. That is because it remains unclear who did this and why. Citing an ongoing group audit, Shinsegae Group and Starbucks Korea are keeping silent about the background and circumstances of the incident, which is triggering "labor-labor conflict" within Starbucks Korea.
◇ Starbucks Korea stays mum about the full story, citing an audit
According to the retail industry on the 22nd, on the 18th Starbucks Korea deleted the commerce team from its organization chart over the "Tank Day" promotion, which made light of the May 18 Democratization Movement. Starbucks Korea said it took the step to prevent secondary harm to individuals at a time when the full story had yet to emerge.
However, employees working in Starbucks stores and dealing with customers are voicing discontent. They say the company is protecting those who threw the company into the eye of the storm while offering no consideration for frontline staff.
Officially, Starbucks Korea has only said that rumors—such as a six-month employee drafting the plan or all heads of team being reassigned to regional posts—are not true. Only the dismissals of CEO Son Jeong-hyun and the executive in charge of planning, and the removal of a part lead and head of team from their duties, have been confirmed.
There is also internal backlash over remarks by an executive at a recent town hall meeting for headquarters support center staff, who said they "believe it was not done intentionally." Inside the company, criticism ranges from saying the comment sought to water down responsibility for historical distortion to questioning whether the audit is a stalling tactic.
The dismissed CEO and executives are also keeping quiet. 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 also note that being dismissed before they could grasp the incident will make it harder to learn the exact truth. The dismissed executives are likely to remain silent, and the inquiry into the working-level staff may well end on the note that they "did not know."
◇ Public agencies and corporations shift away from doing business with Starbucks amid boycott
As the controversy intensifies and audit results are delayed, Starbucks Korea's business is taking a hit. Beyond consumer boycotts, there is major damage to the B2B (business-to-business) side, where corporations buy mobile gift certificates and the like in bulk. Corporate sales of mobile gift certificates and similar products account for about 10% to 15% of Starbucks Korea's total revenue.
The Ministry of the Interior and Safety expressed its intent to boycott Starbucks. Minister of the Interior and Safety Yoon Ho-jung said on X (formerly Twitter) on the 21st, "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 conduct of Starbucks Korea, which has recently caused public uproar. Going forward, 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-hosted events and programs by agencies under the ministry. In addition, the Korea Tourism Organization (KTO) and the National IT Industry Promotion Agency (NIPA) under the Ministry of Science and ICT have switched event prizes from Starbucks coupons to other coffee brands.
The mood is similar in the private sector. NH NongHyup Bank decided to change the prize for its "Confident match prediction" event, run in collaboration with the NC Dinos pro baseball club from the 18th to the 28th, from Starbucks beverage coupons to A TWOSOME PLACE Americano coupons. A corporate official said, "For small marketing events, we chose Starbucks mobile coffee coupons thinking they would have relatively few detractors, but now we are looking for alternatives."
◇ Aggressive marketing to boost sales and owner risk fueled the backlash
Marketing copy and visuals that sparked social controversy have in the past also plunged many corporations into crisis. Even though Starbucks Korea recognized the issue and moved quickly to dismiss its CEO and post an apology, the controversy is continuing to spread.
Inside and outside Starbucks Korea, there is a view that there are two main reasons. First, Starbucks Korea engaged in excessive marketing. To tackle a recent sales slowdown, the company increased limited-time beverages and foods and expanded its goods lineup. As departments planned marketing separately and delegated approvals by size, confusion often arose at the store level, which had to execute the plans.
According to a companywide Starbucks bulletin board, it was common for initial event notices to go out and then be followed by successive revisions and addenda. This was because events proceeded without final coordination, and when issues arose, the situation was papered over with stopgap measures. A Starbucks Korea official said, "There is effectively no control tower that knows how many events are underway as of a given date."
There is also criticism of the recent conduct of Shinsegae Group Chairman Chung Yong-jin. In 2022, Chung drew controversy by posting "eradicate communism" and photos of beans on his personal social network service. The slogan traces back to anti-communist ideology in the conservative camp, but it has been linked to the far-right community "Ilbe (Ilgan Best)" and tends to be consumed as ideological controversy or far-right political play. More recently, his displays of closeness with Donald Trump Jr. and other "MAGA (Make America Great Again)" figures in the United States have accentuated a far-right tinge. Many in the U.S. political sphere view MAGA political figures as close to the far right on the spectrum. This is also why the current affair is becoming a political flashpoint ahead of the June 3 local elections.
A retail industry official said, "Coupang, a U.S.-listed company, is also active in U.S.-focused lobbying, including with MAGA figures, but Coupang works 'under the surface' in line with its government relations principles. Chairman Chung, however, openly flaunted his ties," adding, "Such displays of political leaning or connections can give business momentum but can also come back as a boomerang." Meanwhile, on May 18, when the controversy flared, Chung was in the United States and made an emergency return. There are reportedly no plans yet for a visit to Gwangju.