PaulChristenson

"Say it isn't so...Joe"...

Starbucks to Close 600 Stores Across US


By JESSICA MINTZ,
AP
Posted: 2008-07-01 19:28:20
Filed Under: Money
SEATTLE (July 1) - Starbucks Corp. said Tuesday it will close 600 company-operated stores in the next year, up dramatically from its previous plan for 100 closures, a sign the coffee shop operator continues to struggle with the faltering U.S. economy and its own rapid expansion.

Seventy percent of the stores slated for closure had opened after the start of 2006, the company said in a statement.

To put it another way, Starbucks is closing 19 percent of all U.S. company-operated stores that opened in the last two years, Chief Financial Officer Pete Bocian said during a conference call.

About 12,000 workers, or 7 percent of Starbucks' global work force, will be affected by the closings, which are expected to take place between late July and the middle of 2009, spokeswoman Valerie O'Neil said.

O'Neil said most employees will be moved to nearby stores, but she did not know exactly how many jobs will be lost. Starbucks estimated $8 million in severance costs.

In total, the company forecast up to $348 million in charges related to the closures, $200 million to be booked in the fiscal third quarter ended June 30. Starbucks reports third-quarter results at the end of July.




The 500 additional stores set to be closed had been on an internal watch list for some time. They were not profitable, not expected to be profitable in the foreseeable future, and the "vast majority" had been opened near an existing company-operated Starbucks, Bocian said.

Some analysts had wondered whether Starbucks' explosive growth in the U.S. would come back to haunt it as the market became saturated.

But before Tuesday, the company avoided acknowledging that saturation was an issue, and pinned weak financial results and adjustments to new store openings on the economy.

During the call, Bocian said that between 25 percent and 30 percent of a Starbucks shop's revenue is cannibalized when a new store opens nearby, and that the closures should help return some of that revenue to the remaining stores.

Bocian said there aren't a material number of stores left on the watch list, but that the company will hold remaining stores to the same standards.

Starbucks still plans to open new stores in fiscal 2009, but on Tuesday it cut that number in half to fewer than 200. The company did not adjust its plan to open fewer than 400 stores in 2010 and 2011.

"We believe we still have opportunities to open new locations with strong returns on capital," Bocian said.

During the conference call, the CFO echoed concerns about the economy expressed by Chief Executive Howard Schultz in May, when the company attributed a 28 percent drop in profit to less traffic from U.S. consumers who were feeling the pinch of higher food and gas prices.

At the end of March, there were 16,226 Starbucks stores around the world. The company operates 7,257 of those stores in the U.S. and 1,867 abroad; the remaining 7,102 locations are run by partners who license the Starbucks brand.

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Paul in VT

Dougster

Yes, it's true Paul. But I gotta tell you: I am no longer the super-big fan that I once was. In fact, recently I've actually thought about dropping my signature Starbucks icon or switching to (horrors!) Dunkin Donuts!!! It least Dunkin Donuts coffee is hot and fresh... and bigger sizes still come in Styrofoam cups (keeps it hot, no cardboard taste)!!!

My last few visits to my local Starbucks have been neither satisfying nor worth the trouble and money. Several times now the "hot" coffee has been painfully stale and/or stone cold. One sandwich I bought was so bad that I had to throw it away. Recently, one cup was handed to me half empty when they ran out of my selected brew... I kid you not. As B.B. King might have said: "The thrill is gone"!

I'm hoping and praying that it is just my local Starbucks location... that one questionable store... but for now, no more old stale coffee (I'll always ask specifically for fresh!) and definitely no more sandwiches ever again!!!

Dougster™

LarryRB

I've tried starbucks on a few ocassions and said, never again. Each time it was like super burnt coffee and just plain terrible crap. I often wonder like good friends such as Dougster, why someone would like, support the corporation, and drink super burnt coffee and claim to like it,, My whole life, and I am a heavy coffee drinker and I use 8 O'Clock,, I guess some may not like my brand either, at least it don't taste super burnt.

__________________
"this morning I woke up with nothing to do, it is now afternoon and I have over half of it done".
Digging in hard clay is more relaxing to a worm than going fishing..

Dougster

Starbucks recently came out with their "Pike Place" brew (which I consistently call "Pike's Peak" because I am old, ornery and half-senile). It was designed specifically to compete against Dunkin Donuts coffee and does not have the infamous "burnt" taste that turns many folks off to Starbucks. I ended up with a ton of coupons for free cups of this new blend... and it was a nice change and quite satisfying for a while.

Then the coupons ran out, folks stopped ordering it... and if you order it now, you may find it as stale and disgusting as the 3-hour old generic coffee I used to drink for free at work.

And yes, some of the best coffee is still the stuff I get for free at a certain palatial lakeside resort just south of Sturbridge, MA!

Dougster™

jbrumberg

Dougster:

I did not know that Starbucks served PBNJ sandwiches ! I still prefer my own "foofoo" daily home ground fresh Sumatran coffebean. I go from to relatively quickly. I have had bad experiences in the Starbucks in NoHo, Moonbat City, the Belly of the Beast (to quote Dougster) I am afraid to return . Jay

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Edster

Dougster,
Ay least if you switch to DD you will be supporting a local company!

jbrumberg

I have had some pretty decent bagels from DD and I should know a good bagel. Jay

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NH TC29DA with 14LA FEL with 60" HD QA bucket, cutting edge & toothbar, weighted R-1's, FOPS, CCM M-160 58" tiller, Tebben MD 60" Rotary Cutter, Woods LR 108 96" Landscape Rake, Woods GB60 60" Box Blade

Ducati996

Well my thoughts were always this - over hyped product and atmosphere, eventually comes crashing down. Where are all the Wifi super hip young ones going to hang out now? No loss

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Dougster

It is a baffling, sad and somewhat mysterious fact of life that the poor old Dougster™ simply cannot make a decent cup of coffee at home... no matter how hard or how many times he tries. The old Dougster™ is forced to drink tea at home (always "Red Rose" brand) unless his wonderful GF is there. Thank God that she knows how to make a proper cup of coffee.

But in regard to those Starbucks over-priced, under-flavored sandwiches... You may recall that I tried two or three of them during the worst days of last winter when I couldn't even afford to buy generic peanut butter and "firm" bread for home. Thanks to some wonderful & generous on-line friends, I had a consolidated Starbucks gift card with mucho $$$ on it! Those dubious, overpriced sandwiches saved me from starvation more than once and I kinda got used to them. At times more recently, I would still get them, but the last few sandwiches were nasty and the last one was absolutely hideous and I threw it away 2/3 uneaten. In that the old Dougster™ is not in any position to throw away food, that's was the very last sandwich I'll ever buy from my local Starbucks... I guarantee it!

Dougster™

Dougster

There are some pretty "shady" characters who own Dunkin Donuts franchises. I'm not sure that's the best reason to go "Double D's"!
I've been spoiled over time by some very good bagel purveyors here in the Boston area... and, in fact, we have a marvelous bagel maker right here in my town! No contest... the local indy maker wins hands down!
Panera Bread is the big favorite of the Wi-Fi crowd around here since Panera'a access is free while Starbucks charges. However, service and food/drink quality can vary a lot within the various Panera franchises I've visited... so I cannot really count myself as a big fan (this despite the fact that Dougster Industries has used the local Panera Bread as it's "office" for conducting occasional business meetings).

Dougster™