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Thread: Starbucks to close 600 US stores

  1. #1
    Senior Member flynnaus's Avatar
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    Starbucks to close 600 US stores

    Gene Cafe Coffee Roaster $850 - Free Beans Free Freight
    Good news for some perhaps. It may happen in Australia too??

    http://business.smh.com.au/starbucks-to-close-600-us-stores-fire-12000-20080702-306x.html

    The article cites the increase in living costs such as fuel. I couldnt help wondering if there were other reasons such as consumers finding better coffee elsewhere.

    Ive only tried Starbucks a couple of times (once in Sydney, once in Singapore) and thought it over-rated. I have noticed recently that the Starbucks near where I work used to have queues a year or so ago now appears to be relatively empty

  2. #2
    Senior Member GregWormald's Avatar
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    Re: Starbucks to close 600 US stores

    The last time I visited my sister in Vancouver I tried a Starbucks and was so unimpressed that I left the coffee. The store was dirty--I should have left before ordering.
    At that time in Gastown (the trendy area of the city) there was one intersection with a Starbucks on each corner!
    Greg

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    Senior Member fatboy_1999's Avatar
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    Re: Starbucks to close 600 US stores

    Seems to be a glitch on the Most viewed articles link on the fairfax sites.
    It has this story down as the number 1, 3 and 4 most viewed in SMH website.
    Perhaps each story only deals with 200 stores ;-)

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    Senior Member Koffee_Kosmo's Avatar
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    Starbucks closes 600 stores in USA

    In the news today
    Starbucks is closing 600 stores in the USA because Americans find $4.00 US to expensive for coffee
    Public questioned by reporters said we pay $1.00 US at Maccas

    KK

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    Re: Starbucks to close 600 US stores

    Great news for Boutique Coffee Shops/Cafes etc, ;D as peoples taste develops there can only be a move away from the majors....unless they invest a lotta dough in training and quality control ::)..... I worked for a very stylish franchise, leather couches, timber flooring, the whole nine yards, but when it came to quality control the Manager admitted he didnt have a clue how to make coffee ::) and when asked how do you know your staff can? he replied, "its on thier resume!" :o I asked about whether the company had a Trainer or someone to make sure each store was keeping to a standard and was met with a quizicle look :-?


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    Re: Starbucks to close 600 US stores

    Sad fact is that some of Maccas/HJs machines will produce a more consistent / less offending cuppa than the Idiot behind the real machines in many franchised operations. A case of better the enemyyou know than the enemy you dont ;D

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    Re: Starbucks to close 600 US stores

    I thought this line from the article was interesting:

    "Starbucks sales and earnings have declined as cash-strapped consumers facing record petrol prices pull back on gourmet coffee and other luxuries."

    So tell me again why this has affected Starbucks???

    -A-

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    Re: Starbucks to close 600 US stores

    Yesterday I went to my usual coffee shop in Balmain. As I passed by Starbucks, I realised that it had closed down! (not that Ill miss it!). The guy in my fav coffee shop told me Starbucks had closed *yesterday. I guess the people in Balmain have voted with their feet and the Starbucks shop has gone bust. Its a win for good coffee, but its sad for the people who worked there I guess.

  9. #9
    Wine_of_the_Bean
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    Re: Starbucks to close 600 US stores

    The hospitality industry overall is in for a long, cold winter. Were often the first to feel effects of a slowdown. It doesnt help matters that the winter is generally a slower period.

    You must continue to support your local small businesses, if youre able. The big boys wont go bust anytime soon, but those smaller establishments might.

  10. #10
    Senior Member flynnaus's Avatar
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    Re: Starbucks to close 600 US stores

    Quote Originally Posted by Wine_of_the_Bean link=1214957262/0#8 date=1215117309

    You must continue to support your local small businesses, if youre able. The big boys wont go bust anytime soon, but those smaller establishments might.
    Yeah well I wish I had known about you when I used to work at Pennant Hills. I couldnt find anywhere around there that served decent coffee. The best available was at the Insomnia which was drinkable.

    On your first point I have a preference for the smaller cafe, not the mega- variety (too impersonal). Now Sydney has changed its licensing laws, we may see a few more of,the Melbourne-style cafes tucked away in lanes. Thats one area where the megastores may not be able to compete. A glass of McShiraz? I dont think so.

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    Re: Starbucks to close 600 US stores

    The other thing about this 600 shops though, is that its 600 out of a zillion others. I heard on the news that they are closing these outlets that are not as profitable as their other ones. Also, many of these closures wont matter too much as there is another outlet across the road/on the next corner. And on top of this, they plan to open 200 more by the end of 2009 (I think).

    I remember when I was in NY, looking down Broadway St, I could see 12 Starbucks outlets within the space of about 4-5 blocks. Literally one on every corner.

    My point - 600 outlet closures for Starbucks is squat.

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    Re: Starbucks to close 600 US stores

    [QUOTE=flynnaus link=1214957262/0#9 date=1215122996]
    Quote Originally Posted by Wine_of_the_Bean link=1214957262/0#8 date=1215117309
    The best available was at the Insomnia which was drinkable.
    Thats debatable hahaha I had one there once a while back when I was catching up with a few friends and it was bitter filth. Their food is great though ;)

  13. #13
    Senior Member flynnaus's Avatar
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    Re: Starbucks to close 600 US stores

    Well it was drinkable compared to the rest. I agree on the food though.

    I will have to drop in to WotB one day. Im at Ryde so Id just hop on a train at West Ryde. Theres a Malaysian restaurant nearby iirc so the wife wont need much convincing.


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    Re: Starbucks to close 600 US stores

    A barista told me that the trouble with the franchises such as Starbucks and GJ is that they use less coffee per shot (12 grams not 14 or more) to save money. The brew is therefore either over extracted or weak. Can anyone verify this?

    (I also hate the way they expect you to pay for an extra shot in a medium latte)

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    Senior Member speleomike's Avatar
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    Re: Starbucks to close 600 US stores

    Hi all

    I used to go to GJ. The coffee didnt taste weak. They did over extract my espressos which were always about 50 mL in volume but it didnt taste particularly bad as I think they used quite mild coffee. Starbucks was just undrinkable as espresso.

    I think the problem might just be quite simple. There are more stores and more places now advertising "coffee" as a main feature and thus the customers have more places to go and so SB and GJ are finding it hard to grow in size. Looking at GJ and SB places here they are still well attended by people that order coffee flavoured milk drinks. I think most customers (less discerning than here though) would find their drinks perfectly OK.

    Mike

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    Re: Starbucks to close 600 US stores

    Ill admit that one day I thought GJs was alright. That was many many years ago when I was younger, less eductaed. If thats all youve had, youve nothing to compare it to. Ive obviously seen the light ;)

    I tried a long black about a year ago to see what I used to drink. It was over extracted and bitter.

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    Re: Starbucks to close 600 US stores

    I saw bags and bags of 1kg Starbucks coffee beans for sale at Target for less than $15 each the other week and thought that was strange.

    Click. Now it makes sense.

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    Re: Starbucks to close 600 US stores

    Starbucks has ~15,000 stores around the world.
    Say each store has 3 baristi, so there are ~45,000 baristi - there bound to be
    a few of them that are good. But my own personal experience like the OP,
    they are overrated and overpriced.


  19. #19
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    Re: Starbucks to close 600 US stores

    We spent a lot of time and money at GJ and really like their coffee (Latte) but it was costing us a fortune so we decided to buy our own machine and DIY. I am very pleased with my results so far (1.5 weeks) and continue to improve. GJ good, SB crap Mcdonalds OK if your desprate. I have herd comments about our local GJ being one of the cleanest and best people have seen. We live in gippsland.
    Good on them for that and we still go there on the odd occation.
    Regards
    Crisp Image

  20. #20
    Senior Member flynnaus's Avatar
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    Re: Starbucks to close 600 US stores

    ..and Australia doesnt look good. Im sure a few CS and cafe owners will be somewhat chuffed by this news:

    http://www.smh.com.au/news/national/...097195724.html

    D-day for Starbucks

    Coffee mega-chain Starbucks has refused to hose down speculation that managers of Australian stores will be told at a meeting at 4pm today of plans to close outlets.

    A month after the chains US office announced the closure of 600 stores there, workers at Sydney Starbucks stores *have confirmed that staff have been summoned to a meeting today....etc

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    Re: Starbucks to close 600 US stores

    Im sure it doesnt come us a surprise but a lot of the stores in Australia arent turning a profit. They have certain systems in place that encourage/exaggerate huge amounts of wastage e.g automated weekly ordering of stock that isnt needed and delivering coffee (retail, espresso and drip) that is 1 month or even a week before its recommended use by date (usually 6 months) as it has been delivered from America.

  22. #22
    Senior Member flynnaus's Avatar
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    Re: Starbucks to close 600 US stores

    Sounds like they would be better off disenfranchising from the US parent company and starting their own chain - jump before they are pushed. Use local suppliers. But I think it may be too late for that.

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    Re: Starbucks to close 600 US stores

    Not a chance in hell of that happening, all 100% owned and mismanaged company stores.

  24. #24
    Senior Member flynnaus's Avatar
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    Re: Starbucks to close 600 US stores

    Well if Starbucks are going to dump some sites, what would stop these sites from continuing trading under a new name (e.g. Barstucks) unless Starbucks also manages the lease of the sites?

    Academic I guess as the rug may already be pulled before they can get the chance.

  25. #25
    Senior Member speleomike's Avatar
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    Re: Starbucks to close 600 US stores

    Hi all

    > Im sure a few CS and cafe owners will be somewhat chuffed by this news.

    It will mean that people lose their jobs and Im sure no one would be chuffed at anyone losing their job, whether store manager or barista or cleaner.

    If this does occur though keep your eyes out for good 2nd hand equipment at auctions. Auctioneer: Nearly brand new machine, here. Only had a few hundred kilos of burnt coffee through it. A bargain! Starting bids please.... :-)

    Mike

  26. #26
    Senior Member flynnaus's Avatar
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    Re: Starbucks to close 600 US stores

    Quote Originally Posted by speleomike link=1214957262/20#24 date=1217305271
    It will mean that people lose their jobs and Im sure no one would be chuffed at anyone losing their job, whether store manager or barista or cleaner.
    Certainly job loss is not a good thing but I think if they dont close stores now, *they are only delaying the inevitable. But what I said still applies - some CSers will be happy to see the back of Starbucks.

    If this does occur though keep your eyes out for good 2nd hand equipment *at auctions.
    Second hand Clover anyone?



  27. #27
    Senior Member Koffee_Kosmo's Avatar
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    Re: Starbucks to close 600 US stores

    News Report tonight 29th July 2008
    Starbucks Brisbane CBD store closes its doors today

    Workers called in to be told the store was closing?

    And closed its doors at 2pm

    http://www.brisbanetimes.com.au/news/business/jittery-day-for-staff-at-starbucks/2008/07/29/1217097185311.html


    KK

  28. #28
    Senior Member Dennis's Avatar
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    Re: Starbucks to close 600 US stores

    Theres a more recent, national perspective here...

    http://www.smh.com.au/news/national/starbucks-axes-partners/2008/07/29/1217097227287.html

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    Re: Starbucks to close 600 US stores

    Heres the official media release:
    STARBUCKS RESTRUCTURES AUSTRALIAN OPERATIONS TO POSITION BUSINESS FOR LONG-TERM GROWTH

    Sixty-One Underperforming Stores in Australia will be Closed

    SYDNEY, AUSTRALIA, July 29, 2008 - Starbucks Coffee International, a wholly-owned subsidiary of Starbucks Coffee Company (NASDAQ: SBUX), today announced plans to restructure its business in Australia through a geographical refocus on three core cities and surrounding areas: Brisbane, Melbourne and Sydney. This decision will result in the closure of 61 underperforming locations throughout the country by August 3, 2008.

    After evaluating several options to strengthen the business in Australia, Starbucks made this decision to concentrate its attention and resources on profitable growth, operational efficiencies and an enhanced experience for customers and partners (employees) globally. *As part of the restructuring, Jason Ball, store development manager, Starbucks Australia, will assume the role of managing director effective September 1, 2008.

    “In January 2008, we developed strategies to transform the company for the future,” said Howard Schultz, chairman, president and ceo, Starbucks Coffee Company. “Now, we are well into the implementation phase of transforming Starbucks and we believe that this difficult, yet necessary, decision to close stores in Australia will help support the continued growth of our international business.”

    “While this decision represents business challenges unique to the Australian market, it in no way reflects the strong state of Starbucks business in countries outside of the United States,” continued Schultz. “There are no other international markets that need to be addressed in this manner.”

    Starbucks has been a part of the Australia market since 2000. There are currently 84 Starbucks locations throughout the country, including Brisbane, Canberra, Gold Coast, Melbourne, South Australia, Sydney, and Tasmania. 23 stores will remain open in Brisbane, Melbourne, Sydney and surrounding areas. “We appreciate the exceptional service our partners in Australia have consistently delivered,” said Schultz. ”We are thankful and proud of the contributions our partners make every day and we are committed to treating all of our partners with respect and dignity.”

    Starbucks will reach out to customers who are impacted by the store closures in a variety of ways including directing them to our website: www.starbucks.com.au and Customer Care Hotline: 1 800 140 408. The list of stores that are scheduled for closure will be posted on www.starbucks.com.au and www.starbucks.com by July 31, 2008 after all affected store partners are informed of their store’s status.


    About Starbucks
    Since 1971, Starbucks Coffee Company has been committed to ethically sourcing and roasting the highest quality arabica coffee in the world. Today, with stores around the globe, the company is the premier roaster and retailer of specialty coffee in the world. Through our unwavering commitment to excellence and our guiding principles, we bring the unique Starbucks Experience to life for every customer through every cup. To share in the experience, please visit us in our stores or online at www.starbucks.com.


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    Re: Starbucks to close 600 US stores

    I would like to think that maybe some of us Aussies are more into a venue and atmostphere than American chain mentality.

    While jobs may go in the short term it is an opourtunity for someone else to open up or expand :) Coffee sales across the country really wont have gone up because of Starbucks so their going wont matter much.

    Muckdonalds, Starbucks and KFC free for lots of years now and all the better for it. Quality, style and atmosphere RULE ! 8-) Only 24 more to go then lets start on Muckdonalds :o

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    Re: Starbucks to close 600 US stores

    One can only assume their idea of long-term growth would be to get half as big as they were before I had a laugh

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    Re: Starbucks to close 600 US stores

    "Wow!!!" is what i have to say, thats a massive store close down program. Just about all but admits defeat in the Aussie market I think. Can things really be that bad for them?

    Cafe owners expect a storm of resumes from people calling coffees "tall" employees "partners" and that insist on upselling syrups as a norm.

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    Re: Starbucks to close 600 US stores

    Just heard on the Adelaide evening TV news that all three Adelaide Starbucks are to be closed. Ive only been to one Starbucks, only once. The best part was the friendliness of
    the staff!

    Trevorbeans

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    Re: Starbucks to close 600 US stores

    Quote Originally Posted by Trevorbeans link=1214957262/20#32 date=1217324512
    .... The best part was the friendliness of the staff!

    Trevorbeans
    Dont know how friendly theyll be feeling right now. Cant help but feel sorry for all the staff who face unemployment.

  35. #35
    Sleep is overrated Thundergod's Avatar
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    Re: Starbucks to close 600 US stores

    Quote Originally Posted by cuppacoffee link=1214957262/20#33 date=1217326860
    Quote Originally Posted by Trevorbeans link=1214957262/20#32 date=1217324512
    .... The best part was the friendliness of the [s]staff[/s] partners!

    Trevorbeans
    Dont know how friendly theyll be feeling right now. *Cant help but feel sorry for all the [s]staff[/s] partners who face unemployment.

  36. #36
    CoffeeSnobs Owner Andy's Avatar
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    Re: Starbucks to close 600 US stores


    News reports today were all pointing to this as an economic indicator and not one of them gave the Aussie public credit for having a bit of taste.

    Stale imported coffee made in milk-shake sized buckets is not what the local coffee drinkers really want.

    Im not talking about the savy coffee snob, I think the general public is getting a better understanding about what should happen in their cups and voting with their feet.


  37. #37
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    Re: Starbucks to close 600 US stores

    Starbucks never succeeded in Australia because they chose the wrong model for expansion - they started in the "High Street" right up against the strong cafe scene in both Sydney and Melbourne - they were never going to win that battle especially in Melbourne with the strong and well established espresso market.

    Gloria Jeans on the other hand (and I am no big fan of them by the way) chose to establish themselves in the Regional/Suburban Shopping Centres - once the got a foothold there they then moved there established brand to the "High Street" - although having said that there Suburban Shopping Centre stores are far more successful than the "High Street" stores.

    Gloria Jeans have been so successful in Australia that they have in fact reverse taken over the parent company and the Australian Owners now in fact own Gloria Jeans International - and there management and franchise model is now being used in the USA where they are making some inroads on Starbucks number 1 position.

    The other advantage that Gloria Jeans has over Starbucks in Australia is that they use the franchise model - and some of these franchisees have very powerful reasons to make their investments succeed - 500,000 powerful reasons.

    Having said all that - if I am out and about and desparate for an espresso hit away from home - my first point of call is "Michels Patisserie" where Instaurators Espresso Blend would have to be the best of all the major coffee chains in Australia - and its probably the most reliably prepared espresso in all of the major coffee franchises in Australia.

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    Starbucks Closes Shops

    Sad, I know, but 61 of the 84 shops throughout Australia will close next weekend. ;D

    Seems they didnt read the Australian market too well -- thought we were some outpost which had no idea of European-style coffee, and they were going to do us a favour and show how its done..... ::)

    Seven hundred jobs going, tho... :-/

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    Re: Starbucks to close 600 US stores

    Quote Originally Posted by YeeZa link=1214957262/0#10 date=1215123171
    I remember when I was in NY, looking down Broadway St, I could see 12 Starbucks outlets within the space of about 4-5 blocks. Literally one on every corner.
    Its not that different here in Melbourne. *There are three stores in Swanston Street basically on three consecutive corners and within 500m of each other. *

    This seems to have been their strategy to try and grow the market through saturation and as they are all company owned stores they cross subsidise each other. *May have worked in the US and UK but perhaps not here.

  40. #40
    Sleep is overrated Thundergod's Avatar
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    Re: Starbucks to close 600 US stores

    Does working in a Starbucks count as experience when looking for a job making coffee?

  41. #41
    Senior Member flynnaus's Avatar
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    Re: Starbucks to close 600 US stores

    Quote Originally Posted by Thundergod link=1214957262/20#39 date=1217379407
    Does working in a Starbucks count as experience when looking for a job making coffee?
    Is that a rhetorical question?

    The answer is yes...but could provide a positive or negative impression I imagine.

    Anyone who has worked/is working at SBs willing to spill the beans?

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    Re: Starbucks to close 600 US stores

    Do I sense that CSers are having a feeling of schadenfreude? ;D

  43. #43
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    Re: Starbucks to close 600 US stores

    Afton

    We don’t gain pleasure derived from the misfortunes of others

    It is more like the reason there are no Starbucks in Italy
    Italians and Europe as a group know coffee better than Americans

    Australians as a whole but especially in Melbourne, Sydney, and Brisbane are multy cultural cities mainly ex Europeans. They also know coffee

    They are not going to pay for something they don’t like or enjoy

    The news reports later in the day suggested that the Starbucks shops were loosing money because no one was patronising them.
    So that leads me to conclude that the product along with its delivery was poor.

    KK

  44. #44
    Senior Member flynnaus's Avatar
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    Re: Starbucks to close 600 US stores

    Quote Originally Posted by afton link=1214957262/40#41 date=1217387301
    Do I sense that CSers are having a feeling of schadenfreude? *;D
    My original term chuffed didnt extend to schadenfreude nor imply that I was happy to see people lose their jobs.

    I have the feeling on CS that SB is seen on the same level as Maccas, KFC and other American chainstores - it doesnt live up to the hype. That was my drift.
    That was also my impression from patronising any - I rarely walk out feeling glad I walked in.

  45. #45
    Wine_of_the_Bean
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    Re: Starbucks to close 600 US stores

    I reckon high overheads were killing them.

  46. #46
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    Re: Starbucks to close 600 US stores

    Hi all

    Thanks to afton for teaching me a new word: "schadenfreude".
    Yes it seems appropriate word to use here :-)

    Mike

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    Re: Starbucks to close 600 US stores

    I reckon high overheads were killing them.
    Tend to agree, I knew of a store that was making 9k a week but still not anywhere near drawing a profit.

  48. #48
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    Re: Starbucks to close 600 US stores

    Quote Originally Posted by Wine_of_the_Bean link=1214957262/40#44 date=1217390145
    I reckon high overheads were killing them. *
    Yep
    Costs are a large factor
    But spending hundreds of thousands in a shop fit out takes many years to recoup

    KK

  49. #49
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    Re: Starbucks to close 600 US stores

    I reckon it was just saturation.
    No chain can do that well when there are so many of the same in close proximity.
    It was like the scene in The Simpsons where Bart goes to the mall and he passes a SB, then another SB, then a store with a sign that says Coming Soon.. SB

    He then goes into a shop to get his ear pierced. The owner tells him to make it snappy, its about to become a SB.

    He then walks out with his ear pierced and a Venti or some such thing.

    The big fast food chains actually have conditions in the franchise deals about proximity of other stores.

    Part of the problem here I feel is that they were all ownde by the parent company, so no real thought went into that component.

    I dont personally like their product, but there is certainly a market that they can do well in.

    Perhaps the reduction in stores will help them towards a more sustainable model.

  50. #50
    Sleep is overrated Thundergod's Avatar
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    Re: Starbucks to close 600 US stores

    Behmor Brazen - $249 - Free Freight
    High overheads wouldnt be a problem if there were sufficient sales to offset them.



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