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Jul 2, 2008 03:37 AM

Starbucks Closing Hundreds of Stores

Starbucks is closing 600 of its 7,000 company-operated stores in the US and letting about 12,000 employees go. Here's hoping that local indies are able take up some of the slack.

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  1. I kind of doubt if there actually is slack, given that pricy brewed coffee is one of the first things to go when you have to shell out an extra $30 to fill your gas tank to get to work. In fairness, I simply refused all along to pay their prices and almost never visit any coffeehouse. But when dragged to Starbucks for a meeting last week, I was not impressed with the lukewarm, tasteless mocha and extremely dry blueberry scone I spent $5 on.

    1 Reply
    1. re: Emm

      I actually used to be a frequent customer of Starbucks. Then my household started feeling the pinch of this economy, and sure enough, the first step I took was to give up getting Starbucks coffee to go on my way to work (saving $2 per day), and take the extra time to brew it at home every morning instead.

      So I completely understand why they are closing locations.

    2. I wonder why it took them so long to learn the Mcdonalds lesson of market saturation. When you have 3-5 stores within walking distance of eachother, you're only stealing business from yourself.

      I kinda feel sorry for the teens/college kids who make Starbucks their hangout. Maybe now they'll learn the simple pleasures of getting high next to the dumpsters behind the Quick-E-Mart and loitering in parking lots. Just like in the Bruce Springsteen song.

      Or they could learn to make their own coffee.

      2 Replies
      1. re: monkeyrotica

        << I wonder why it took them so long to learn the Mcdonalds lesson of market saturation. When you have 3-5 stores within walking distance of eachother, you're only stealing business from yourself. >>

        I remember that in the 1990s they did study the question of how densely to place their stores in Downtown Seattle, at least. They came up with an answer along the lines of people being willing to walk two blocks to their store, with 1 block being the optimal distance, and long elevator rides counting as a block. This is how they ended out with some buildings having a Starbucks on one side and another on the opposite side. Not to mention one very tall building with the same setup, plus a store halfway up the building.

        Makes me wonder if they've been relying on Downtown Seattle data on saturation that doesn't apply elsewhere. After all, Seattle is pretty coffee-crazed; even in the late 80s - early 90s when the economy wasn't so great, there were coffee carts covering the city, often across the street from each other downtown. There was even a cart inside the University library and another inside the bookstore.

        1. re: monkeyrotica

          They were never stealing business from themselves. Three 100sf Sbux on one block is one 3000sf Sbux. They're company-owned stores and it all goes to their bottom line. McDonald's are franchises. You cannot compare the two.

        2. I feel bad for its employees, and it's depressing news for the US economy in general. Hopefully, the company will offer good severance packages. As someone pointed out, it's doubtful that local indies will take up the slack at times like this. And they certain won't be able to absorb the number of unemployed from Starbucks.

          13 Replies
          1. re: gloriousfood

            Starbuck's has been opening stores at an alarming rate in my area: three drive-thrus within two miles of each other since the beginning of the year. We now have six Starbucks (in a town of 100,000) when we had just three a year ago. I wonder if we'll lose the older, walk-up ones in favor of the drive-thrus, which is not a great statement to make in the wake of $5 gas.

            1. re: brendastarlet

              The vast majority they are closing have been opened in the past two years. They're typically stores opened up in close proximity to other Starbuck's that have never made any money. Chances are you'll keep the original ones and the newer drive-thru ones will be the ones to go.

              1. re: brendastarlet

                Well, of course, there's the "Simpson's" episode where Homer and Bart pass by six consecutive Starbucks in a mall, and the lone merchant they find tells them to hurry up because "they're putting in another Starbucks".

                I live in a suburb of Toronto of about 180,000 people. We have 8 Tim Horton's outlets (Tim's is a Canadian born coffee/doughnut chain). We have three Starbucks.

                Tim's is always busy - no matter what time of day or night, there's a line. On the other hand, the Starbucks are generally line-free; even in the morning rush, there might only be two or three people in front of you, whereas at Tim's, the line is often ten or more. Far from closing stores, they are planning to open new ones, and have "Help Wanted" signs in all their stores.

                Perhaps it's because Tim's sizes are "small, medium, large, and extra large", not some foreign words. Perhaps it's because Tim's charges $1.49 for a large coffee, not $3. Perhaps it's because Tim's offers reasonably good tasting sandwiches, soups, bagels, etc. as well as pastries. But mostly I think it's because at Tim's, I don't get a bucketful of attitude from some jumped-up "barrista" who sneers at me because I don't spend five minutes discussing the provenance of their beans before ordering.

                We have "upscale" Canadian coffee chains as well - Second Cup and Timothy's (both, BTW, predate Starbucks) - that offer different roasts and beans, but they have managed to keep their expansionary dreams in check. There are two of each in my town, and they seem to have a steady business.

                Starbucks, IMHO, is just following the path of Krispy Kreme - believing their own hype, expanding too quickly, and cashing in on stock options - and is now on the same downward slope. (SBUX is now trading at roughly what it was 5 years ago, and down more than 60% from its peak.)

                1. re: KevinB

                  If all you want is a coffee, SBux doesn't usually go over 2 bucks. It's the espresso drinks that will ring you in at ridiculous prices.

                  Even so, Tim's is for the common man who just wants a quick coffee. They have their own formula in the Double Double that satisfies the fat and sugar cravings most people have.

                  Krispy Kreme has other issues. Who's going to order stacks of donuts when you get them for free just waiting in line?

                  1. re: WingMan72

                    I think Tim Horton is pretty damn good for the price. I'd pick theirs over SB drip any day. Why pay $2 for a cup of burnt SB drip coffee when I can get a good cup of $1 McD brew? I haven't been back to SB since I started drinking McD coffee again.

                    1. re: dpan

                      In Columbus, TH is about 0.20 cheaper than SB on regular coffee. The major difference is that the lines at TH are non-existent since they bring in most of their baked goods frozen.

                      1. re: dpan

                        I really wanted to like Tim Horton's. I tried their coffee once, and it was quite disappointing to me. It was VERY weak IMO. I will certainly give them another shot, if they would only open a location closer to Boston

                        1. re: Ralphie_in_Boston

                          The Canadian locations have very good coffee. The US locations are really inconsistent. In Canada, I'll do TH. In the US, SB.

                          1. re: jlawrence01

                            That's strange. Doesn't coffee get imported from halfway around the world? Howcome they can't properly transport it across the border?

                            1. re: jlawrence01

                              My TH experience was based on visits to locations in Toronto. I have not been to one in the US.

                      2. re: KevinB

                        I don't like either SB or Tims for regular coffee. I'll go to Timothy's or Second Cup before either, if available.
                        That said, I agree with what you're saying in the 'burbs, but downtown in the business district, the two Starbuck's that are about a two min walk from each other in the same building, are always VERY busy, with lines out the door. The Tim's are equally busy (in another busy). I think the difference is, there is the right demographic to keep both busy downtown, whereas Tim's appeals to the mini-van demographic in the burbs, more then Starbuck's.

                      3. re: brendastarlet

                        I'm in a city of one million (Calgary Canada) we now have 101 Starbucks. 6/100k is not close to saturation.

                        And here in Canada, they're not closing any locations.

                        1. re: John Manzo

                          that may change as the economy worsens in Canada as well (it's been a slower decline)

                    2. Claire, Maybe this will encourage some young people to go to college instead of getting covered with tattoos and becoming "baristas".

                      1 Reply
                      1. re: Leper

                        At the Starbucks nearest my old apartment, most of the baristas were grad students at the nearby university. The flexibility in hours combined with decent salary and benefits were of great help to those in programs that didn't have a lot of assistantships to hand out.

                      2. This makes me wonder if Starbucks consciously opened up too many stores simply as a way to drive others out of business, knowing that these sorts of cutbacks would eventually take place and that their market would be secured due to lack of competition. Or am I being paranoid?

                        As for severence checks, since the closures are to take place over the next year and a half, I suspect that many employees will leave the job before their stores even close. High turnover workforce and all.

                        2 Replies
                        1. re: Cachetes

                          Cachetes: On the contrary, there are more independent and mini chains of espresso shops than ever. They are following the Starbuck's model, that is the original model that Starbuck's developed--the coffee aroma (due to the grinding the beans in house), a place to meet rather than drive throughs, etc.

                          1. re: jayjay

                            I've given up the drive-thru/grab and go lattes. I can make coffee at home pretty cheaply. But I will go to Starbucks if i'm going to meet a friend for coffee. We can hang out and chat for hours for a few bucks. A pretty good deal. Of course, i'm in Seattle and there are other small coffee shops where i would rather do that (hello, El Diablo on Queen Anne). Starbucks tends to happen more with the friends i meet up with on the eastside.