South Korean police raided the national headquarters of Starbucks Korea in Seoul’s Centerfield building on Aug. 5, straitstimes.com, as part of an ongoing investigation into a controversial marketing campaign. Investigators with the Seoul Metropolitan Police Agency’s special detective unit executed the search-and-seizure warrant to examine whether company officials planned the promotion with the intent to insult those involved in the country’s pro-democracy movement, according to The Korea Times.
South Korean Police Raid Starbucks Korea Headquarters
The controversy stems from a “Tank Day” promotion launched on May 18, which marked the anniversary of the 1980 Gwangju uprising. During the historic crackdown, a military dictatorship rolled tanks into the southwestern city of Gwangju, killing at least 165 civilians. Critics said the advertising campaign trivialized the landmark protest movement and defamed victims and bereaved families, who view the slain as martyrs.
The Campaign Details and Public Backlash
The marketing push offered discounts on “Tank” tumbler sets and referenced “5/18” directly. One line of ad copy described the sound of setting a tumbler on a desk with the phrase, Put it on the table with a sound of ‘Tak!’
according to The Korea Times. The word “Tak” drew severe criticism because it recalled the 1987 death of student activist Park Jong-cheol, who was tortured to death by police who falsely claimed he simply gasped and collapsed after someone slammed a desk.
The campaign sparked immediate public outcry after running from May 15 to May 26. Starbucks Korea pulled the promotion within hours and later disclosed that it had used artificial intelligence tools to develop the materials without conducting an adequate historical review. The controversy prompted criticism from political figures, including South Korean President Lee Jae-myung, who condemned the campaign on social media by asking, Out of what twisted resentment did they commit such an act?
according to thedeepdive.ca.
Corporate Fallout and Executive Changes
Civic groups and bereaved families filed criminal complaints against key executives, naming Shinsegae Group Chairman Chung Yong-jin and Son Jung-hyun, the former CEO of Starbucks Korea. In response to the furore, Son was fired and Chairman Chung issued multiple public apologies, bowing publicly to ask forgiveness from victims’ families.
Shinsegae’s supermarket chain affiliate, E-Mart, holds a 67.5 percent controlling stake in Starbucks Korea, with the remainder held by Singapore’s sovereign wealth fund GIC. Although Starbucks Corp. sold its remaining stake in the business in 2021, its Seattle headquarters also apologized for the incident.
To rebuild trust, Starbucks Korea closed all of its more than 2,000 stores nationwide early in June for mandatory history and social-sensitivity training, marking the first nationwide early closure since the chain entered South Korea in 1999.
Internal Audits and Ongoing Police Investigation
Police launched their investigation in May after civic groups filed complaints alleging defamation and insult. Shinsegae Group previously stated its own internal audit found no evidence of intentional wrongdoing, but admitted the investigation had limitations.
Investigators are hunting for evidence that was not included in the company’s internal review to determine whether the timing of the campaign was intentional.
Market Impact and Sales Decline
The “Tank Day” fiasco caused a sharp decline in sales and triggered a shift in South Korea’s coffee franchise market.
Data from IGAWorks’ Mobile Index platform detailed the shifting spending patterns among major local competitors:
- A Twosome Place (May): 123.65 billion won against Starbucks’ 121.19 billion won.
- A Twosome Place (June): 120.68 billion won while Starbucks fell to 100.39 billion won.
- A Twosome Place (July): 117.05 billion won, exceeding Starbucks’ 110.06 billion won.
- Cumulative 3-Month Total (May–July): A Twosome Place reached 361.38 billion won compared to Starbucks’ 331.64 billion won.
A Twosome Place led Starbucks in monthly transactions for three consecutive months—the first time in three years of data that it has led Starbucks on a monthly basis. Meanwhile, budget franchise Mega MGC Coffee also closed in on the market leaders, recording 98.21 billion won in customer payments in July, as customer defections and damaged trust accelerated changes in the competitive landscape.
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