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The 'Tank Day' debacle cost Starbucks Korea big time. Who gained?

Published: 29 May. 2026, 17:56 Updated: 29 May. 2026, 18:51

KIM MIN-YOUNG
[email protected]

A Mega Coffee branch in Seoul on April 1, 2025, left, and a Starbucks Korea store in Seoul on Jan. 24, 2025 [YONHAP, NEWS1]

Starbucks Korea's local competitors recorded measurable gains in the two weeks following the company's botched "Tank Day" marketing campaign as the coffee chain lost sales and app traffic.

Starbucks Korea's estimated card sales fell 18.2 percent in the week of May 17 to 23, from 31.9 billion won ($21 million) to 26.1 billion won, the lowest weekly figure since January 2023, according to alternative data platform Aicel. Payments through the Siren Order app declined 21.9 percent, indicating that the drop was concentrated among the chain's app-based regular customers rather than occasional buyers.

The controversy began on May 18, the anniversary of the 1980 Gwangju Democratization Movement, when Starbucks Korea launched a “Tank Day” tumbler promotion, which included an apparent reference to the torture death of a student activist. “Tank” is used in far-right online communities as a nickname for Chun Doo Hwan, the former Korean military dictator whose crackdown during the uprising left hundreds dead.

Mega Coffee, the country's leading low-cost coffee brand, has been considered a major beneficiary. By Tuesday, the chain had claimed the top position in KakaoTalk Gifts' cafe category, a position Starbucks had held since Kakao began directly operating its gift voucher business in 2019.

Whether Mega Coffee's gains are attributable directly to the Starbucks controversy is not certain, as the brand had been growing steadily beforehand. Mega Coffee was already the second-largest brand in the market before the "Tank Day" debacle. Its operator, MGC Global, reported 646.9 billion won in revenue in 2025, up 30.4 percent on year.

Other competitors reported similar gains. Estimated payments through Twosome Place's application, Twosome Heart, rose 3.6 percent on year to 27.5 billion won over May 18 to Sunday, according to IGAWorks' Mobile Index. Ediya increased 2.6 percent to 5.57 billion won, recording its highest single-day figure of the month on Sunday, and Hollys rose 3.4 percent to 2.2 billion won. Daily active users increased across the three chains, with Twosome Heart up 37.3 percent, Hollys up 22.1 percent and Ediya up 5.1 percent.

Starbucks tumblers and cups lay on the ground, broken and dented, at a press conference condemning Starbucks Korea in front of the E-Mart Gwangju branch on May 21. [YONHAP]

The pattern of gains reflects two distinct migration paths, according to Lee Hong-joo, a professor of consumer economics at Sookmyung Women's University.

"In the short term, cafes that can substitute for Starbucks, such as Twosome Place, Ediya and Hollys, are most likely to benefit," Prof. Lee said. "Consumers who feel the price burden may also move to low-cost brands such as Mega Coffee, Compose Coffee and Paik's Coffee."

The shift was most pronounced in gifting, a significant revenue source for Starbucks in which purchase decisions are shaped by the social presentation of the gift rather than personal consumption. A Starbucks voucher, long regarded as a go-to "status" gift, became a liability for some consumers during the controversy.

The pressure in the gift card segment is likely to intensify. Several public institutions have moved to distance themselves from the brand. Interior and Safety Minister Yun Ho-jung said the government would not use Starbucks products at official events, the Ministry of Patriots and Veterans Affairs issued an internal directive against Starbucks vouchers and the Ministry of National Defense suspended a soldier-welfare partnership it had signed with Starbucks Korea on April 6.

BNK Busan Bank, KB Kookmin Bank and other lenders said they were reviewing the use of Starbucks vouchers in promotions, signaling further declines in the chain's mobile gift business ahead.

The data also indicates limits to the impact. Starbucks Korea's app retained most of its user base, with daily active users declining approximately 2 percent, from an average of 1.01 million before the controversy to 992,000 in the following days, according to IGAWorks' Mobile Index. The figures suggest that while consumers redirected gifting purchases and reduced spending, most did not abandon the platform. Starbucks remained the largest coffee brand in the market by a wide margin during the controversy period.

A passerby walks in front of a Twosome Place branch in Seoul on March 24. [YONHAP]

Combined payments across major coffee franchises exceeded 1 trillion won last month, with Starbucks ahead of all competitors. The durability of the competitors' gains is uncertain.

Lee Eun-hee, a professor of consumer studies at Inha University, characterized the departing customers as trial buyers who left over the controversy rather than dissatisfaction with the product. "These are consumers who did not leave Starbucks because they disliked the coffee, the space or the atmosphere, but because of an external controversy," Prof. Lee Eun-hee said. "If they try another brand and are satisfied, they may stay. But if they are not satisfied, there is a good chance they will return to Starbucks."

Previous Starbucks Korea controversies followed a similar pattern of short-term decline and subsequent recovery. A summer bag recall, prompted by formaldehyde contamination, in 2022 and a humidifier recall three years later each resulted in a temporary drop in sales before the brand recovered.

A Starbucks cafe is seen in Seoul on May 27. [NEWS1]

Whether the brand recovers this time will depend on its response, the analysts said, and both cautioned against aggressive promotional measures. Prof. Lee Hong-joo said trust, rather than discounts or events, should be the priority.

"Starbucks must acknowledge consumer disappointment and respond with empathy, reduce its merchandise-centered image and strengthen its core competitiveness in coffee quality, store experience and service," he said. "If it fails to recover the disappointment of its existing loyal customers, the long-term damage to brand value could be greater than the short-term loss in sales."

BY KIM MIN-YOUNG [[email protected]]