Starbucks recently announced it will close 500 stores in addition to the 100 stores earlier reported to close. As many as 12000 positions (FT & PT) will be eliminated. What happened?
•Obviously they grew too fast. This rapid growth resulted in many cases with new stores cannibalizing the sales of their own older stores. In January there were 57 Starbucks within 10 miles of downtown Dallas. You can bet there weren't any in Pleasant Grove or on Jefferson Blvd.
•Success brings on competition, and 7-11 and McDonalds jumped in as 800-pound gorillas.
•Starbucks' coffee is too expensive and the economy is faltering. Why go to Starbucks when McDonalds' coffee is rated better tasting and is much more affordable. An overpriced cup of coffee is seen by many as an expendable luxury in an age of $4 per gallon gasoline.
•The company lost its focus. The coffeehouse experience was tossed out with the sofas. I don't recall McDonalds trying to rebrand itself with movies and books at the checkout counter.
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