Starbucks Closures. 300 Stores, 6700 Jobs - 2/3rds in the US. Business Down 69%

PasturesNew

Coffeeshop giant Starbucks has announced it will cut around 6,700 jobs and shut 300 stores as it reported a 69% plunge in quarterly profit.

Starbucks has struggled as hard-up consumers are forgoing expensive lattes and frappucinos as the recession bites.

It said it made a net profit of of $64.3m in the 13 weeks to December 28, down from $208.1m a year ago.
Two-thirds of the store closures will be in the US and they come on top of the 661 closures announced in 2008.

http://news.bbc.co.uk/1/hi/business/7857316.stm

Rosie75

Bad news for their employees, but Starbucks have far too many stores. Remember the joke in Shrek 2 about the Starbucks over the street from another Starbucks? No joke - that sums up most high streets. This overexpansion was a deliberate strategy to attempt to drive their competitors out of business. It's a shame they've largely succeeded in doing this because what we've been left with is crap coffee at inflated prices.
It's hard to feel any sympathy for a company which used clustering in its attempt to achieve global dominance. The free market is more like communism that we realise.

Snooze

PasturesNew wrote: »

http://news.bbc.co.uk/1/hi/business/7857316.stm

First bit of good news I've seen for a while. :T

Rob

PS. don't bother with the guilt trip "what about the poor staff" replies because I don't care, so get over it. :rotfl:

davsidipp

overpriced for their coffee anyway so its come back to bite them on their bum.shops like this have been greedy for years.

Ian_Griffiths_Halifax

I've never been in one so i can't comment. I've always preferred to go to a greasy spoon cafe.

bubblesmoney

i am sure this wont be the last of their closures. they overexpanded and are now paying the price. their business model doesnt suit all places abroad where they expanded.

slipthru

Starbucks is the worst of all the coffee chains, so i'd be glad to see them go. Shame for the staff though.

spuds_2

Shame for the staff, but they are a greeedy company who massively over-expanded. Way too many shops.

The staff were paid a pittance in the US and the managers got a share of the tips - then a ruling said they had to repay $100 million to staff.

From Conde nast news:

"Starbucks have had a 69% drop in first-quarter profit, to $64.3 million. That's less than $45 a day in profit from each Starbucks outlet, based on the company's claim to own, license, or have a joint-venture stake in 15,756 stores worldwide.

The real shocker is that founder and CEO Howard Schultz asked the company's board of directors last week to reduce his annual base salary to $1, from the $1.2 million he made last year. The board actually settled on $10,000 a year. That's enough to cover his health insurance co-payments and leave him a little less than $4 a month to spend, or about the cost of a grande latte".

I am sure Howard will have some savings and be able to afford a biscotti with his latte, though with the closing of Starbucks in Israel and Australia too it's not looking good.

iB1

I'm not really surprised. When times are hard, the first thing that disappears are the luxuries. Expensive coffee is exactly the kind of thing that people will want to cut back on.

Also, I remember reading a story about two years ago about Starbucks opening coffee houses literally opposite each other, as they found people were too lazy to make it across to the other side of the road. It's typical over-expansion, and in the process, it put many other independent coffee places out of business, which is a real shame.

bubblesmoney

i do like the brownies they sell though which is the only reason i sometimes enter their shop and no i dont usually buy their coffee then.

i remember when someone i was supposed to meet gave me starbucks as near the location. little did i know there were 2 nearby and i was running around like a headless chicken trying to find the person while all the while they were giving me directions based on 1 starbucks while i was following then going in circles seeing the other. got fed up and went into one and had their brownie for the 1st time so it wasnt that bad a day after all but didnt like their coffee.

robin_banks

Expanded too quickly, but living in central London I've plenty of choice as to where to go for a coffee, I never use Starbucks.