On Tuesday, Starbucks Corporation (NASDAQ:SBUX) delivered a depressing quarterly report and forecast. Weaker-than-expected quarterly revenue and earnings came as the result of a surprise decline in same-store sales along with falling traffic across regions, with the coffee chain predicting its shops will continue to underperform over the following quarters. Upon the report, shares tanked 12% as CEO Laxman Narasimhan admitted that amid a highly challenging environment, this quarter’s results did not meet expectations, emphasizing that they do not reflect the power of the brand, its capabilities and opportunities. Like McDonald’s Corporation (NYSE:MCD) and PepsiCo Inc (NASDAQ:PEP), Starbucks’s results reflecting that stretched consumers have pulled back on spending.

For the quarter ended on March 31st, Starbucks reported revenue dropped 2% YoY to $8.56 billion, falling short of $9.13 billion that LSEG expected as same-store sales fell 4% and traffic contracted 6%. StreetAccount expected same store growth of 1%. Its home market continued to struggle as U.S., same-store sales dropped 3% as traffic plummeted 7%. International segment same-store sales declined 6% as both average ticket and transactions dropped. As for its second biggest market, China plunged 11% as the average ticket declined 8%.

Starbucks lowered its prior revenue growth guidance that was from 7% to 10% by guiding for revenue growth in the low single digits. While it previously projected global and U.S. same-store sales growth in a range from 4% to 6%, it now guided for low single digits to flat. Also, Starbucks previously guided for a single digit increase in China’s same-store sales, while it now expects a decline by single digits. Previously, Starbucks guided for earnings growth from 15% to 20% while it now expects growth in ranging from flat to low single digits. But, sales are expected to start recovering during fiscal fourth quarter.

On a brighter note, Starbucks’ most loyal customers have stayed loyal, but occasional coffee drinkers have been coming less often. In response, Starbucks plans to offer them, its non-loyalty members, a version of its app in attempt to lure them to order, along with speedier service, promotions and menu tweaks, such as a the recently introduced revamped version of the blueberry muffin. It is also going after health-conscious consumers with customized zero sugar options that will be arriving soon to its menus. Starbucks is also looking for ways to meet overnight demand, from 5 p.m. to 5 a.m, with lavender drinks being one of its most successful launches. Over the next four years, Starbucks is expecting to achieve supply chain cost savings amounting to $4 billion, while it previously forecasted to save $3 billion.