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Nov 11, 2008 07:32 AM

Starbucks tumbles further

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  1. Awww, what a shame.

    It seemed like such a good idea at the time, screamingly overpriced coffee.

    1. They closed a ton of stores last quarter and are not making *as much* of a *profit* as the prior quarter.

      They are still making a profit overall.

      They area business and that is the purpose of being in business, to make a profit.

      1. I wouldnt shed a tear if they went out of business.

        5 Replies
        1. re: swsidejim

          I'm no fan of Starbucks, and probably bought coffee at one of their locations less than 10 times in total. My mother didn't raise any fools, and I know better than to let money dribble out of my pocket on such over-priced nonsense. But they do provide jobs and pay taxes, so I am just as concerned about them potentially going out of business as any other large employer. I mean, nobody was dragged into their stores kicking and screaming and forced to buy their products.

          1. re: flourgirl

            I'm right with you in that I know I never bought more than $20 of product from Starbucks but I know they took care of their employees by paying a decent hourly wage and providing health care It is a shame that a lot of hard working people will be out of work and lose their health care.

            I also believe that Starbucks increased profile of coffee in The US and that allowed for the growth of a lot of small, local, independent coffee houses.

            1. re: flourgirl

              A cup of coffee, not a latte, isn't much more expesive then places like Dunkin Donuts. In NYC every bodega and deli sells coffee for about $1.50 a cup, pretty much the same at Starbucks. It's only the lattes that get pricey but those do involve more work to prepare.

            2. re: swsidejim

              You know, that's really not nice to say. What about all of the people who work there? I certainly hope they stay in business. If you don't like them, don't go there (which I know you don't).

              1. re: swsidejim

                I would, I enjoy their coffee. Also they revolutionized the coffee we drink in this country. Coffee every where as elevated in taste after Starbucks bust onto the scene. Love them or hate them they changed coffee for the better. Its easy to forget the swill that Americans used to drink.

              2. This illustrates how sensitive food service businesses are to small declines in sales. (Of course, other industries are, as well). 55% of the Starbucks profit decline resulted from an 8% decline in same store sales. 40% resulted from closing unprofitable locations, a consequence of overzealous management and imprudent expansion.

                1 Reply
                1. re: Veggo


                  The Starbucks execs are trying to spin this as best as they could, BUT, they do have a point. They got started on downsizing the number of stores a while ago, seeing the handwriting on the wall. In addition, the key trend is that the decline in sales has leveled off to a constant rather than accelerating downward. So they could possibly have been pescient in their maneuvers.

                  I am not a big fan of all the fancy coffee drinks, give me my espresso and be done with it, but as someone else said previously, in my neighborhood, the reality is that the Starbucks wannabes came along after Starbucks rather than Starbucks started to put Mom and Pop shops out of business.

                2. I think it depends what part of the country you're talking about. The Bay Area already had lots of cafes. I know of three places where a Starbucks opened up across the street or next door. I don't know if it's true, but I've read that they did pick the locations deliberately to put the local places out of business. I wouldn't be surprised.

                  On the other hand, when I took a month long road trip through the South East 15 years ago, I had a terrible time finding good coffee. If Starbucks brought decent coffee to those places, then why complain?

                  A recently closed Starbucks in Berkeley has been replaced with a locally owned cafe and music hall. That makes me smile.

                  33 Replies
                  1. re: Glencora

                    I don't understand the ones who are talking about Starbucks being evil and such. I am glad to have a Starbucks in my little town. I can at least get a nice coffee without driving miles or spending tons on a special coffee maker. As far as Wal Mart goes, I think they are a bad company in that they have sent jobs and production overseas, as well as not giving health insurance to many of their employees and they helped create the economy we are in today. I have seen nothing on this board to tell me that Starbucks is anywhere close to WM in that regard,

                    1. re: kprange

                      One chain in a town is one thing. On my walk to work (NYC) a couple of blocks from the subway, I can pass four Starbucks shops -- and one is INSIDE MY BANK. It's ridiculous.

                      1. re: Up With Olives

                        Brings to mind the classic Onion headline "New Starbucks to Open in Bathroom of Existing Starbucks."

                          1. re: ferret

                            Or the classic Simpsons ep with a mall that was nothing but Starbucks...with an empty storefront boasting a sign saying "coming soon, another Starbucks"

                            1. re: coney with everything

                              Headline: " Starbucks to Close 600 Store"
                              The closing will affect a six square block area of Manhattan.

                              Hey, with today's frenetic lifestyle, you need a jolt of caffeine every block, in order to keep up, no?

                          2. re: Up With Olives

                            They closed several in St. Louis - you could stand and see two SB - and pick which one you wanted to go to. Walgreens and CVS are becoming the same way. It is the way of big business. Will they ever learn?

                            1. re: kprange

                              That is so true. I just don't get it. We have two CVS's in my not very big town. And big surprise, one of them is almost always empty.

                              We also have a Wal-greens right across the street from a Rite-Aid - and they carry nearly identical goods and have nearly identical sales.

                              1. re: flourgirl

                                it's based on the old walmart model - you open more than you can sustain to drive the independents out of business - then when they are gone you scale back to sustainability

                                1. re: thew

                                  If that was the plan it totally back fired in the East Village of Manhattan. Starbuck's introduced many people to paying premium prices for coffee and then had to retract while many independents opened in the neighborhood. Two Starbuck's closed and I can't even count how many other small coffee bars and cafes open in the last couple of years.

                                  There are people who frequent the neughborhood places that wouldn't dream of going to Starbuck's.

                                  1. re: KTinNYC

                                    the plan works better when your product doesnt taste like warm charrd fecal coffee

                                  2. re: thew

                                    The problem with your theory, thew, is that I'm not talking about independents. There ARE no independent pharmacy/dry goods stores in my area and haven't been for years. These are all chains I'm talking about. And CVS, the chain with two stores in the area, is the one likeliest to end up having to close one of their stores. Sorry, but there is nothing about that that remotely makes sense. I might add that CVS spent a FORTUNE on the second store - which is the one that seems to be perpetually empty.

                                    1. re: thew

                                      Rite-Aid has the same strategy. They'll open right next to or across from another drug store.

                                2. re: Up With Olives

                                  Yeah but in NYC one office building could contain 1000 people. So one Starbucks could thrive from a few buildings. I also work in NYC and get Starbucks coffee all over the city and I can tell you that I am almost always waiting in a long line. So NYC of all places seems to make sense for a lot of locations.

                                  Plus if it wasn't Starbucks it would be some other coffee chain.

                                  1. re: hudsonvalleyfoodblog

                                    Why must it be a chain? And why must I pass four Starbucks in a three block area? I don't believe that's fair.

                                    1. re: Up With Olives

                                      It doesn't have to be. I'm all for local businesses. I'm a huge prominent of local business and spend a lot of time trying to promote those types of places. That said, there just aren't that many independent and successful coffee houses. The ones I have tried don't match the quality of starbucks or they are just serving some other chain/brands coffee. A local cafe that's serving Seattle's Best isn't really a local place if you ask me. Sure the owner is local but that's it. Starbucks employees at each store are just as local as the the employees working at some other cafe.

                                      Also the fact that Starbucks acts so responsibly makes them more acceptable. I've read a lot about the company and they do a lot of really great things, regardless of their size.

                                3. re: kprange

                                  Agreed, Starbucks is far from evil. It's one of the most socially responsible large companies in this country. They offer their part-time employees healthcare, buy from responsible growers and are involved with a lot of great charity causes.

                                  The negative reaction to Starbucks is a weird phenomena that we have in this country to bash things that are successful, be it a company, movie star, athlete or even a chef. I don't understand that line of thinking but it happens all the time.

                                  1. re: hudsonvalleyfoodblog

                                    People I know generally bash Starbucks because they think the espresso is over roasted crap that, least time I visited, wasn't wasn't even pulled by a human. Not worth the price charged. That having been said they are a socially responsible company.

                                    1. re: KTinNYC

                                      I typically only order the coffee and I think its great. I do agree that the new espresso machines do not offer the same quality as the old ones. In an effort to keep up with demand I think they sacrificed quality over speed. But before Starbucks it was pretty hard to get espresso on the go.

                                4. re: Glencora

                                  Starbucks can't put a local small business out of business simply by opening a store.

                                  People have to choose to stop going to the local business in favor of Starbucks in order for Starbucks to effectively put the local, small business out of business.

                                  Certainly Starbucks did not open a cafe across the street from an existing cafe and undercut them on price, right?

                                  The people in the neighborhood who chose to shop at Starbucks rather than the existing cafe put the existing cafe out of business.

                                  1. re: ccbweb

                                    True. I also believe that some of the Starbucks opened earlier than the local cafes. Family-run places aren't perfect, in fact maybe they're less likely to give benefits. I dunno. Chains are consistent. Personally, I'd rather go to a place with history and quirkiness. Though to be honest the only to-go coffee I've bought in the last several years was with a Pete's gift card. I can't really afford it.

                                    1. re: Glencora

                                      If I could go to a locally owned coffee house, I would in a heartbeat. While I only go once a week during the school year - a Friday treat - I would rather go to a family owned place vs a large chain.

                                    2. re: ccbweb

                                      <Certainly Starbucks did not open a cafe across the street from an existing cafe and undercut them on price, right?>

                                      Certainly they DID do that! In MANY, many cases and places.

                                      However, they do have the rep for treating their employees well and providing good benes. Imho, they are not the devils that Wal-Mart is, but no angels, either.

                                      1. re: ChefJune

                                        I'm sorry...Starbucks undercut other coffee shops on price?

                                        Isn't Starbucks routinely decried as the home of prices that are too high and also higher than other coffee shops?

                                        1. re: ccbweb

                                          For a 12 ounce/small cup of coffee, $1.50 is a good price.

                                          All the other stuff is pretty much hot or cold milk, with flavoring. Those items do cost more. People choose to buy it.

                                          I read the sign out front: Starbucks. Coffee. That is what I buy. Unless I feel like a treat. Or dessert.

                                          1. re: Cathy

                                            Not arguing the price nor what people choose to buy.

                                            My comment is in relation to an upthread exchange about the idea that Starbucks puts other coffee shops out of business by opening up nearby and offering lower prices ala Wal-Mart.

                                              1. re: Cathy

                                                No worries. I buy coffee when I go there, too.

                                    3. re: Glencora

                                      Hmm, well, as long as this got dragged up again, I should finish the story: the locally owned cafe that replaced the Starbucks went out of business in less than a year.

                                      1. re: Glencora

                                        I always prefer to give my money to a local business. But I have a very hard time finding one that has the consistency and quality of Starbucks. In my experience, the local mom and pops end up cutting expenses in order to stay in business. In coffee, that means cheaper beans, or buying in such bulk quantities they can't keep the coffee fresh. Others have a talent problem, especially the mom & pop roasteries. The one in my neighborhood over-roasts their beans about once a week and stinks up the whole block.

                                        1. re: Shane Greenwood

                                          You're in San Carlos, right? That is kind of a coffee desolation row. The closest decent place I could suggest would be Cafe Sportiva in Redwood City on Brewster.

                                          1. re: chipman

                                            Yep. We have two Starbucks and it's too convenient to just get coffee there rather than deal with the car for a cup of joe. Thanks for the tip though, we'll check out Sportiva one of these days.

                                            FYI: Caffe Sportvo

                                            1. re: Shane Greenwood

                                              Yep, Cafe Sportivo. Never could spell or read very well. For your info, they use beans roasted by Ecco caffe.