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A bitter-tasting jolt for Starbucks
Jul-06-2008

A bitter-tasting jolt for Starbucks

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HIT hard by a slowing economy, the Starbucks coffee chain is closing 600 stores, signalling an end to the Seattle company’s United States boom, at least for now. From 1982, when the company had just four stores, until just two years ago, when Starbucks announced plans to triple its number of stores, it seemed as if Starbucks knew no bounds. Economic pressures such as rising petrol and food prices, combined with increased competition from Dunkin’ Donuts and McDonald’s, are taking their toll. The closures announced this week will affect about 12000 employees, or sevenpercent of Starbucks’ global workforce, based on estimates that each store employs 20 people full- and part-time. [1] Chicago Tribune reporter 9:56 PM CDT, July 1, 2008 You might have to walk a whole extra block to get your latte. Starbucks Corp. will begin shuttering 600 stores nationwide at the end of July, cutting about 7 percent of its global workforce as it sheds unprofitable locations and responds to a drop-off in consumer spending. The Seattle-based company said Tuesday that the store closings, coupled with a scaled-back expansion plan for its next fiscal year, will help the specialty coffee giant meet its longer-term targets for profitability. While Chief Financial Officer Pete Bocian said in a conference call, "We believe absolutely we're seeing a major impact from the economy," he also acknowledged that Starbucks' aggressive growth strategy of recent years created problems with cannibalized sales and market saturation.[2]

The announcement to close the store came as Starbucks Corp. announced last Tuesday it would close 600 company-operated stores in the next year as a result of the faltering U.S. economy. This is equivalent to 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 last week. At that time, Seattle-based Starbucks did not say which stores will be closed, only that they are spread throughout the country. The company said 70 percent of those slated for closure had opened after the start of 2006.[3] SEATTLE (AP) — For a decade it appeared there was no such thing as too many Starbucks for U.S. coffee drinkers, whose willingness to buy its $4 lattes and dark drip brews rationalized a second green-and-white mermaid awning just down the street — and sometimes even a third. In a sign that those days are over, Starbucks Corp. announced Tuesday it will close 600 company-operated stores in the next year as the faltering U.S. economy hastened the pain caused by the company's own rapid expansion.[4]

Coffee shop owners do not expect the economic slowdown to affect their business, despite slowing consumer spending. Emmet Daly, owner of the Cafe Sol chain in Dublin, said that sales were up 15 per cent this year compared with last year. He plans to open two more stores by the end of this year, bringing the Cafe Sol chain to 13 stores. ''Things are going great, even with all the bad news about the place,' he said. American chain Starbucks, which last week announced that it would close 600 of its U.S. stores in the next year, has no plans to follow suit with any of its 24 Irish stores.[5] July 2 (Bloomberg) -- Starbucks Corp. rose in early U.S. trading after the coffee retailer, which has doubled in size since 2004, said it will cut 7 percent of its workforce and close 600 stores. Howard Schultz, the 54-year-old chairman who fired his chief executive officer in January and took over the post himself, is opening coffee shops at a slower pace and shutting unprofitable stores as he tries to recapture the charm he says Starbucks lost amid a rapid expansion that often put two or more locations within eyeshot of each other. Investors are likely to respond positively to the cutbacks because they signal Starbucks is coming to grips with its "overgrowth,'' said Matthew DiFrisco, an analyst at Oppenheimer & Co. in New York. "They're basically the victim of their own success,'' DiFrisco, who recommends buying Starbucks stock, said yesterday. "They've admitted that'' by closing 600 stores, he said.[6] Baristas at Starbucks coffee shops around America are starting to get a taste of what it feels like to be a carworker in Detroit. On July 1st the coffee retailer, based in Seattle, said it would close a further 500 stores in America (in addition to the 100 closures it announced earlier this year), and reduce its workforce of roughly 172,000 by around 7%. A remarkable 70% of the stores due to close were opened after 2005, which seems to confirm the comment made by Howard Schultz, when he returned to the helm of the company in January, that most of Starbucks' wounds were self-inflicted.[7] Is this the end of the old Starbucks-on-every-corner joke ? It should be. It's time to stop thinking about Starbucks as a hot growth company and more like a (sorry, Howard) McDonald's-like blue chip that posts strong numbers, suffers through hard times, and, yes, fires folks sometimes. In an aggressive move to boost profitability, Starbucks just announced it plans to close some 600 under-performing stores in the U.S. over the course of its fiscal 2008 and 2009. We knew some store closures were coming, though not this many - CEO Howard Schultz originally said only 100.[8] Have no fear, Starbucks is still going to be here." Earlier this year, Starbucks announced plans to close 100 underperforming U.S. stores when CEO Howard Schultz retook control of the company in January.[9]

While thanking employees who have worked for the company, CEO Howard Schultz is quoted in the Starbucks news release saying, "At the same time, we recognize that it is necessary to make decisions that will strengthen the U.S. store portfolio and enable us to enter into fiscal 2009 focused on enhancing operating efficiency, improving customer satisfaction and ensuring long-term value for our partners, customers and shareholders."[10] Starbucks said it hoped to absorb some of the affected employees. The closures will start in late July, with most of them complete by mid-2009. Starbucks reinstated Howard Schultz as chief executive in January, and he has since been shaking things up by adding new product lines, slowing U.S. store growth and ramping up international expansion.[1]

The collapse of Starbucks, I mean. This week the Seattle-based coffee kahuna announced it is closing 600 of its 6,800 U.S. stores and laying off more than 12,000 employees, or "partners" in the company's New Age-y jargon.[11] As many as 12,000 Starbucks workers will lose their jobs when the company begins closing 600 U.S. stores this summer. The Seattle coffee company is cutting 5 percent of its U.S. locations as part of a wide-ranging effort to boost its bottom line and its stock price.[12]

After the announcement, shares jumped 72 cents to $16.34 in after-hours trading. The plan to cut 600 locations will cause 12,000 Starbucks employees to lose their jobs, but some employees will be given the opportunity to switch to other stores. "By far, this is the most angst-ridden decision we have made in my more than 25 years with Starbucks," Schultz said in a message to employees on the company Web site. With the economy in such bad conditions and the dollar struggling internationally, many people are tightening their wallets and pinching pennies.[9] As a premium-priced supplier, Starbucks is suffering from the same trading down that is sending shoppers rushing from Target to Wal-Mart. McDonald's, it seems, has perfectly timed its decision to start selling coffee that is pleasant to drink. Shares in Starbucks are now trading at barely one-third of their peak value from two years ago. Rather than being a sign of panic, the closures may be evidence that Mr Schultz means to return the company to its focus on quality, rather than growth. After closing all its American stores simultaneously for a brief retraining session a few months ago, there are plans for further improvements in the staff's competence and demeanour, and in the cleanliness and comfort of its shops.[7] The store closings are a significant slice of Starbucks's operations, representing 8% of company-owned stores in the U.S. and 7% of the firm's global workforce. They account for some 19% of company-owned stores built since October 2005. More than a third of the Starbucks in the U.S. are run by licensees - you'll find them in airports and on the turnpike - and so far there are no plans to shutter any of those. Nor are there plans to close any international stores, which are a small part of the company's overall profits but its biggest prospect for future growth. Not all U.S. growth has ground to a halt: Starbucks will open between 200 and 250 stores in the U.S. over the next few years in markets where they still aren't meeting demand.[13] Starbucks said that it could take up to $348 million in charges and write-offs related to the closings, including costs tied to lease terminations and severance payments. Starbucks began scrutinizing its stores performance this year, Peter Bocian, the companys chief financial officer, said Tuesday in a conference call. Though he said there were no additional plans to close stores on such a broad scale, Bocian said that the company would continue to examine its options.[14]

After years of drinking bad coffee, the $2.11 is a heck of a deal. It's not only Starbucks that will suffer but all "premium" products. The luxury industry will begin to suffer as a whole as wages have not risen enough to be able to afford these products. No kelliethat wouldn't make sensethat would add insult to injuryif they just lower the cost then they affect the profit margin at over 7,000 storesversus eliminating stores that probably shouldnt have gone up in the first place.[15] The company said the closures, which are scheduled to take place over the remainder of fiscal 2008 and the first half of fiscal 2009, are part of the strategy shift it began in January. Starbucks said the stores are located in all major U.S. markets and that 70% of them opened in the past 2 1/2 years.[16] In an interesting note suggesting Starbucks may have been cannibalizing existing stores by opening new stores too close to others, the coffee company said that 70% of the stores being closed have been open less than three years. Store closures will occur throughout the rest of this year and into the first half of next year.[17] Starbucks Corp. reported Tuesday it will close 600 underperforming stores nationwide by the middle of fiscal year 2009. The Seattle-based coffee giant said it will open less than 200 new stores in the United States in its 2009 fiscal year.[18] The Seattle coffee giant did not disclose which stores would be closed. It operates more than 60 in the Pittsburgh area, including those that operate within Giant Eagle stores. Starbucks also said that it will open fewer than 200 new stores in the United States in its fiscal 2009 year.[19]

The company will try to find jobs for people within Starbucks, but that could be difficult with fewer than 350 new U.S. stores expected to open in the fiscal year beginning Oct. 1. About 200 of those will be directly operated by Starbucks, with the rest managed by other companies like bookstores and airport concession firms.[12] Morning Edition, July 2, 2008 Starbucks will close more than 600 shops in the U.S. in the coming months, which analysts say is a consequence of the chain's spreading too far, too fast. Seattle-based Starbucks did not say which stores will be closed, only that they are spread throughout the country. It did say most of the outlets on the chopping block are new Starbucks stores that have been open only since 2006. In a webcast conference call late Tuesday afternoon, Chief Financial Officer Peter Bocian said the company plans to close nearly 20 percent of these newer outlets.[20] SEATTLE (AP) — 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 is still feeling the pain from the faltering U.S. economy.[21] LOS ANGELES (Reuters) - Starbucks Corp (SBUX.O: Quote, Profile, Research ) said on Tuesday it plans to close 600 underperforming U.S. stores and cut up to 12,000 full- and part-time positions, as it copes with an economic downturn and increasing competition. The coffee seller, bracing for its first full-year profit decline since 2000, has been grappling with the slowing U.S. economy and consumer spending at the same time that major competitors like McDonald's Corp (MCD.N: Quote, Profile, Research ) have begun attacking its core business.[22]

Deutsche Bank (nyse: DB - news - people ) analyst Marc Greenberg said Starbucks may have to make further cuts because it is still opening a large number of stores in overseas markets like Western Europe, where growth is slowing down and profit margins are lower. Baird analyst David Tarantino said the move "suggests the brand may be approaching saturation in some markets," and the company's efforts to stabilize sales at its older locations could take time to work. Starbucks did not give details about which locations will be closed, but Stephen Kron of Goldman Sachs (nyse: GS - news - people ) said he thinks the closings will be weighted to areas that have been hit the hardest by slumps in the housing industry and the broader economy.[23] Starbucks Corporation has announced that it will not be closing one hundred stores as originally thought - but six hundred stores. Starbucks announced the shocking news yesterday that the company is closing 600 stores within the next year as they struggle with economy and rapid growth woes.[24] Before last Tuesday, the company avoided acknowledging that saturation was an issue and pinned weak financial results and adjustments to new store openings on the economy. Hoffman said since he found out that the Donut Hut and Starbucks were closing, he'''s been out contacting business people who could potentially develop there. '''It'''s been needed ''' but maybe on a smaller scale then what a Starbucks is,''' he said.[3]

The stores are at 502 State St.; in the Millcreek Mall; and outside the mall, in the Millcreek Plaza. The closings, which will affect about 12,000 workers, areexpected to take place between late this month and March 2009. The closings represent 19 percent of U.S. company-operated stores, Chief Financial Officer Pete Bocian said earlier this week. Starbucks also cut its projected number of new store openings in fiscal 2009 in half, to fewer than 200.[25] The AP reports : 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. O'Neil said most employees would be moved to nearby stores, but she did not know exactly how many jobs would be lost.[24]

In the beginning the coffee was rich, but now it seems most of the time it just tastes burnt. I don't drink coffee but do study companies and their success and failures. Starbucks have saturated the market and this purge of 600 stores will be a good thing for them in the long run. The point I find curious in all these posts is a lot of people are in support of the little guy. Starbuck's is one of the most responsible companies in america when it comes to it's employee's and the job they create. They offer a great benfit package and a fair wage to their employees which you don't see at these other smaller shops. This directly effects one of the biggest issues in our country today which is affordable healthcare. They also are responsible in many other ways. Don't just look at the surface but actually research this information before you make your comments.[15] Starbucks needs to LOWER THIER PRICES instead of closing stores. They used to be niche and unique and people would fork out the umpteen-dollars for the cappuccino (and for status). Now they are common and clich'' and they need to bring those prices into the real world. With their market share, two-dollar lattes would inspire a revolution. Just a thoughtanything is better than cutting jobs in this market. It was a matter of time, the coffee was never really great.[15]

GREENVILLE Coffee lovers all over Hunt County probably have more jitters than usual, after the announcement this week that Starbucks will be closing 600 of its stores across the country. They may want to take a time out and take another sip of their triple grande, non-fat, no-foam vanilla latte, or iced cappuccino, because as of Wednesday evening there was no word on whether the move will impact the Greenville Starbucks. An official statement issued by a representative with Starbucks' corporate office, who asked that her name not be used, indicated the stores identified for closure are spread across the entire country, with approximately 70 percent of them having been opened since fiscal 2006.[26] Starbucks, the largest coffee chain in the world, said 70 percent of the U.S. stores targeted for closure had been open since the beginning of fiscal 2006.[27] All told, Starbucks estimates pretax closure costs of $328 million to $348 million. Stores targeted for closure will be spread through the U.S. Most of them -- about 70% -- are relatively new stores that have only been open since the beginning of fiscal 2006.[28] The company said the 600 stores include 100 stores already slated for closure. Starbucks expects to record some $200 million in write-downs this quarter as well as $120 million to $140 million in lease-termination costs in the fiscal fourth quarter and first half of fiscal 2009.[16] The company expects charges between $328 million and $348 million related to the closures, including a charge of $200 million in the third quarter. Once those underperforming stores have shut down — a process the company said will happen gradually from now until the first half of 2009 — Starbucks said it expects the change to boost earnings by $100 million a year.[29]

Starbucks Chief Financial Officer Peter Bocian said the stores were taking 25 percent to 30 percent of sales from nearby locations. The closings will hurt long-term revenue projections while helping the company achieve its profit goals, Bocian said on a conference call yesterday, without elaborating. Other Starbucks stores may recapture $180 million to $360 million of the roughly $600 million in sales lost from the closures, DiFrisco said.[6]

Starbucks also cut the number of company-operated stores it will open in fiscal 2009 in half, to fewer than 200. The company did not adjust its plan to open fewer than 400 stores in 2010 and 2011. In May, Starbucks said its second-quarter profit sank 28 percent as U.S. consumers cut back on visits in light of rising food and gas prices.[21] Starbucks plans to open fewer than 200 new U.S. company-operated stores in fiscal 2009. This compares to already-reduced guidance that it would open 1,175 U.S. stores in 2008 and 1,000 U.S. stores in 2009.[17]

Starbucks also said it would open fewer than 200 new company-operated stores in the United States in fiscal 2009, down from 250 previously. The stock rose to $16.53 in late electronic trading, up 5.8 percent from its close of $15.62 on the Nasdaq.[27] "There's just way too many of the stores around to get upset." Speculation among employees and customers about which local stores might be getting the ax spread Wednesday after Starbucks Corp. (Nasdaq: SBUX, $15.68) announced Tuesday it will close about 600 of its company-operated stores in the next year.[30] Coffeehouse magnate, Starbucks Corporation (NASDAQ: SBUX ), is closing 600 U.S. stores. The retail giant made the announcement July 1 following a "rigorous evaluation" of its U.S. company-operated stores to sort out underperformers. The 600 closures are inclusive of the 100 stores the retailer announced it would close in February of this year.[17] On July 1, the Seattle coffee behemoth announced that it would close some 600 underperforming stores in the U.S., a move that Schultz called, "the most angst-ridden decision we have made in my more than 25 years with Starbucks." It is a sign that Starbucks, which has 11,434 outlets in the U.S., has hit a wall.[13] July 1 (Bloomberg) -- Starbucks Corp. will close 600 U.S. coffee shops and eliminate as many as 12,000 jobs, the most in its history, as Chief Executive Officer Howard Schultz slows the chain's expansion after it doubled in size in four years. Starbucks gained as much as 7.2 percent in late Nasdaq trading after saying the reductions amount to 7 percent of its workforce worldwide.[31] About 12,000 jobs would be eliminated, according to Associated Press reports. "It is necessary to make decisions that will strengthen the U.S. store portfolio and enable us to enter into fiscal 2009 focused on enhancing operating efficiency, improving customer satisfaction and ensuring long-term value for our partners, customers and shareholders," Starbucks Chairman and CEO Howard Schultz said.[18] In a written statement to "partners," Howard Schultz, Starbucks president and CEO, said, "For more than a year now we have seen the adverse impact that a slower economy and dramatic decline in consumer confidence have had on our U.S. business. This has resulted in a drop in comparable store sales due to reduction in customer traffic.[32] With 15,000 stores worldwide, almost 50 million customers buy something from Starbucks every week. The company suddenly is taking as many shots as it's pouring. CEO Howard Schultz was downright contrite as he addressed 6,000 stockholders at the company's recent annual meeting in Seattle. HOWARD SCHULTZ, Starbucks: I humbly recognize and share both your concern and your disappointment in how the company has performed and how that has affected your investment in Starbucks. LEE HOCHBERG: The company's stock has lost almost half its value in a year.[33] Starbucks has been struggling for some time. Its stock price, which closed at $15.62 Tuesday, is half of what it was a year ago. Earlier this year, the man who essentially made Starbucks, Howard Schultz, returned to the company as the hands-on CEO.[20] As financial stumbles took a toll on the stock price, Starbuckss former chairman and chief executive, Howard Schultz, retook the companys reins in January. Starbucks said in May that its second-quarter profit fell 28 percent, to $108.7 million, in what was its weakest quarter as a public company.[14]

While the number of Starbucks locations nationwide will soon be downsized by 600, UF students will still have all four campus stores to quell their caffeine cravings. In a letter sent to stores Tuesday, CEO Howard Schultz announced that beginning in mid-July and lasting through March 2009, the company will close 600 of its "underperforming" locations.[34] Starbucks said it was closing stores that were either not profitable or likely to struggle in the future as economic conditions deteriorate. "This makes our decision to close stores difficult because it is disrupting the lives of the people who have worked so hard to deliver superior service to our customers," said chief executive Howard Schultz.[35]

Founder Howard Schultz was a wizard at popularizing the concept of gourmet coffee served in an inviting atmosphere. The chain he established in Seattle grew like kudzu, achieving such ubiquity that you could find two within a single shopping mall, such as Portland's Pioneer Place. As the chain rolled out new stores close to existing stores, they cannibalized between 20 percent and 30 percent of the first store's sales, according to estimates in the financial community.[36] In a nostalgic attempt to recapture the company's early success, it announced a new coffee blend named after Seattle's Pike Place Market, the site of Starbucks' first store.[33] In a superb article in The New York Times, the paper analyzes what may have been the worst decision by Starbucks executives. In the surge of rapid expansion in the U.S., they put many of their stores in the wrong places. According to the article, "the company was so determined to meet its growth promises to Wall Street that it relaxed its standards for selecting new store locations."[37] The news that Starbucks had dramatically upped the number of U.S. stores it would close over the next nine months, from 100 to 600, shows that the company has hit a point of saturation, at least in a number of places where it operates.[36]

Shares of Starbucks Corp. rose in premarket trading Wednesday, but analysts said the company's plan to close 600 stores, while a step in the right direction, will not cancel out the problems posed by a weak U.S. economy.[23] Starbucks shares, which have been falling steadily for nearly two years, jumped 72 cents, or 4.6 percent, in extended trading after the announcement. They had lost 12 cents to close Tuesday at $15.62. Seattle-based Starbucks did not say which stores will be closed, only that they are spread throughout the country. It did say 70 percent of those slated for closure had opened after the start of 2006.[4] Starbucks has been trading between $28.60 and $15.39 a share during the last year. Andy Cross, a senior analyst at The Motley Fool in Alexandria, Va., said the higher number of closures was "a little shocking," partly because new Starbucks stores in his area "continue to be packed.[12]

Standard & Poor's announced today that it would review Starbuck's credit rating for a possible downgrade (it currently is rated BBB+). With all this bad news, what appeal do SBUX shares have to investors? For starters, the stock's valuation is quite compelling. Starbuck's current price-to-cash flow is 9.64, while its historic range is 15.4 - 25.4. Its current price-to-sales is 1.13, while its historic range for this metric is 1.95 - 3.2. Overseas growth offers a potential for SBUX to regain some of its lost glory. SBUX plans to open 1,000 stores in foreign markets this year and the foreign marketplace is not cluttered with competition (both internal and external).[38] The decision to shutter 600 stores, while unprecedented in Starbucks' history, doesn't mean that the chain won't continue to expand. It still plans to open 150 stores overseas, as well as 200 new locations in the United States, down from a previously announced 250.[36] A wave of recent expansions compounded the phenomenon, to the point that Starbucks has warned of deteriorating financial results. This week, it went further, rattling consumers and employees with the news that it would start closing stores with a vengeance. The company didn't identify which 600 stores it would close, except to say they are in every geographic area and are operating unprofitably. The company owned and operated 6,793 stores in the United States as of Sept. 30, according to its 10K statement, with another 1,712 abroad. It's become trendy to deride Starbucks as a symbol of gentrification, homogenization or sheer capitalism. The chain grew and flourished because it did some innovative things that set it apart from most of its competitors.[36] Local independent coffee house owners could see a boon from Starbucks Corp.' s decision to close 600 stores nationwide, although it's unknown which stores will be axed. With Tuesday's news, some residents are no doubt feeling they may have to pick up a cup of Joe at the Starbucks across town or the mom-and-pop coffee house around the corner in the future. "It's the buzz," said Morris Siancuri about Starbucks' announcement.[39] Even with a strategic 5-year plan, Starbucks must do more than close stores. They need to strategize their price-points, order more enticing foods for their menus, step-up their customer service, bundle food and drinks with sensible price points and make a damn good cup of coffee.[15] I will always be a loyal customer. Starbucks is the epitomy of market saturation, not a very good business model when you sell what is essentially a novelty product (if you're paying $5 for coffee, it's a novelty) during a recession. As a friend said to me recently, "The only place Starbucks didn't open a store was within one of their own stores!" How true.[15]

Starbucks employees at several locations also did not want comment on the record, referring all questions to corporate headquarters. While many customers of the popular coffee chain said they hoped their local store would not be affected, most said they weren't overly concerned about the store closings.[30] By the way growers are growers, beans are beans and Seattle Coffee Company and Starbusk are the same coffee company. One just charges more for their coffee than the other. I congratulate Starbucks Corporation, for offering medical benefits to their employees! But I do not visit them. When they opened a store directly across from our local roaster/cafe, it appeared to be a direct attack! Predatory marketing, trying to steal customers, rather than develop their own market in an area lacking a cafe.[15]

Most of the outlets targeted for the scrap heap are either in places where recession has hit hardest, like Florida and California, or which have been opened in the last few years, or which are hard by existing stores. My Starbucks--in the beachside Hamptons section of Long Island, a place which Schultz originally declared Starbucks-free so that his summers here wouldn't be spoiled by thoughts of work--has been around a while. It is miles from any other Starbucks (or any other place serving decent coffee) and is in a community that really is, as Schultz once said of Starbucks' entire realm, "recession-proof."[40] John Glass, an analyst with Morgan Stanley, regards the rationalization as "a good first step in the company's recognition that growth was excessive over the past few years." He was not alone in criticizing Starbucks' rush to expand. David Palmer, an analyst with UBS Securities LLC, said that Starbucks' estimates imply that one in five of the U.S. stores opened since 2006 is losing money, which in his view underscores the extent of the problems with its real estate selection in recent years. "It appears that the difficulty of managing such a massive scale and acceleration of company-operated unit growth in the last two years led to poor real estate decisions," he said in a report.[41] While it is closing underperforming stores, the company is still opening new U.S. outlets, although it is cutting back from 250 to 200 next year. Starbucks opened many stores in areas which have since been hard-hit by the housing slump such as Florida.[35]

Last month, it laid off about 100 store-development employees after deciding to throw the brakes on U.S. expansion. It had planned to open fewer than 400 U.S. stores beginning next year, down from 1,788 new U.S. stores last year. That forecast has now been trimmed by 50 more stores. In February, Starbucks also cut about 600 positions through attrition and layoffs, many of them at its Seattle headquarters.[12] Starbucks (nasdaq: SBUX - news - people ) said late Tuesday that it will close 600 company-run U.S. stores over the next year.[23]

The U.S. closures, which include 100 stores that Starbucks had previously planned to close, will result in cutting up to 12,000 full-time and part-time jobs, although the company said it will try to reassign as many people as possible.[28] As many as 12,000 Starbucks workers will lose their jobs when the company begins closing 600 U.S. stores this summer.[12]

About 70 percent of the stores closing had opened since October 2005. That means Starbucks is shuttering about 10 percent of the 4,081 U.S. stores opened since then. "They probably made some poor real-estate decisions, and when they opened stores in fiscal 2006, they probably didn't anticipate how tough the economy would be and how the brand would be struggling," said John Owens, an analyst at the research firm Morningstar in Chicago.[12] "Details for specific locations are still being finalized. The stores identified for closure are spread across all major U.S. markets with approximately 70 percent of them opened since fiscal year 2006. Out of respect and dignity for our partners, and our desire to share this information with impacted partners first, we are not publishing a full list of the stores," a company statement said.[42] The company blamed the U.S. closures on the slowing economy there. Insomnia Coffee Company has 34 stores in Ireland and plans to open a further 25 outlets this year. The company has concession outlets in dozens of other shops and will have a presence in 65 shops by the end of this month.[5] Coffee chain Starbucks plans to shut 500 stores in the U.S. on top of the 100 closures it had already announced.[35]

With the coffee sitting around getting cold at hundreds of Starbucks across the country, the nation's largest coffee chain announced today it will close nearly 600 stores that were not profitable. As national economic growth grinds to halt, worried consumers have saved their pennies (more likely, $5 bills, if we're talking about those mocha whip fraps) and visited Starbucks less frequently.[43] Starbucks ( SBUX ) can't catch a break. The coffee retailer says it will close 600 stores, about 8.5% of its 7,100 total stores, an expansion of the 100-store closing target it had previously announced.[15] Weekend Edition Saturday, July 5, 2008 Starbucks' retail woes may indicate a larger slump in the retail sector. The coffee chain announced this week that it's closing about 600 stores, but it's not the only chain slimming down to meet hard economic times. Retail consultant Howard Davidowitz says consumers are going to get so scared they will start saving and that fear will also lead them them to spend less.[20] The future of Starbucks Coffee stores in the Upstate is uncertain after the Seattle-based corporation announced it is closing about 600 stores in the United States.[32]

Seattle-based Starbucks said on Tuesday that it will close 600 company-owned coffee shops in the United States, up from 100 the chain initially planned to shutter. Starbucks said it will close stores that are not profitable and not expected to be profitable in the foreseeable future, and that the "vast majority" of those that will close are near another Starbucks shop.[44]

SEATTLE (AP) — Starbucks Corp. said Tuesday it will close 600 stores in the United States in the next year and cut back the number of new stores it had planned to open.[29] In addition to the cutbacks, Starbucks said it would open fewer than 200 new stores in the United States next fiscal year, down from the 250 initially planned.[14] Starbucks also expects to open fewer than 200 new stores starting in the 2009-2010 fiscal year, according to a company news release.[34] 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.[4]

The element of truth in countless parodies - like the new Starbucks that opens up in the bathroom of another - has finally caught up to a company that at one time was able to launch five new stores a day and still have lines of customers out the door.[13]

During the call, Bocian said that between 25 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.[4] Starbucks will also open fewer than 200 new stores in the U.S., compared with 1,800 last year.[33]

Starbucks also plans to open fewer stores in fiscal 2009. While the move is expected to help improve the company's profit margins and sales at its older stores, analysts still believe lower consumer spending will hurt Starbucks into next year.[23] Starbucks is planning to open 200 new locations in fiscal 2009, down from an original plan of 250. "Clearly, they're looking at stores that aren't making money, and the good news is that the vast majority of Starbucks stores do make money," said Sharon Zackfia, an analyst at William Blair & Co. "I don't know that there's anything here that you would read into Starbucks having hit the wall in growth."[2] SAN FRANCISCO -- In a sharp reversal of its growth plans that led to an oversupply of stores, coffee behemoth Starbucks SBUX will shutter about 600 locations while opening fewer than 200 by the end of the fiscal year.[28]

Starbucks Corp. (SBUX) said it will close 600 underperforming company-owned stores and further cut its U.S. expansion plans for the fiscal year starting this autumn amid growing economic uncertainty heading into the summer.[16] The move cuts even deeper into already reined-in expansion plans at the struggling coffee giant, which is in the midst of a sweeping restructuring. Tuesday's announcement compares with its April expectation of a net "less-than" 400 new U.S. stores each year from fiscal 2009 to 2011.[16] The Seattle-based coffee giant (Nasdaq: SBUX) also said it plans to open fewer than 200 new U.S., company-owned stores in fiscal 2009.[45]

The Seattle-based premium coffee company also announced Tuesday it expects to open fewer than 200 new company-operated stores in the United States in fiscal 2009.[46] The company also expects to open fewer than 200 new U.S. company-operated stores in fiscal 2009. The company has not revealed which stores will be closed, but it did say about 70 percent of them opened since fiscal 2006.[32]

The company said it expects to place "many" of the 12,000 affected employees, or approximately 7 percent of the company's global work force, into available positions at nearby Starbucks stores that are remaining open.[45] The company said 70 percent of the shops to be closed have been open for less than three years. In a Securities and Exchange Commission filing, Starbucks said the closings will affect as many as 12,000 full-time and part-time retail positions, about 7 percent of its global work force. The company expects to find jobs for many employees at its other cafes.[47] 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.[4] About 12,000 workers will be affected by the closings, which are expected to take place over the next year, according to Valerie O'Neill, a spokeswoman for the company. O'Neill said most of the employees will be moved to nearby stores, but she did not know exactly how many jobs will be lost.[21]

The company said that, while jobs will be eliminated, it expects to move some employees to existing Starbucks locations. It expects $8 million in severance costs.[16] Starbucks said charges associated with the planned U.S., company-operated store closures, including costs associated with severance, are estimated to be in the range of $328 million to $348 million.[45] Starbucks said the store closures will lead to pretax charges of about $328 million to $348 million, including $8 million in severance costs and $120 million to $140 million in lease-termination costs and future lease obligations.[12]

Starbucks will take on charges between $328 million and $348 million for the store closings, including the costs of terminating leases and severance payments.[2] Starbucks (NASDAQ:SBUX) said pretax charges related to the closings will total $200 million. It also expects to book up to $140 million in lease-related costs in its fourth quarter and first half of fiscal 2009.[47]

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What is curious is that I am not hearing of Dunkin' Donuts in a similar issue. I wonder if Starbucks is now considering limiting their own full asset committment and franchisesSchultz will probably cringe at that thought. Perhaps if 20 oz of their coffee didn't cost more than 1 gallon of gas, people would be willing to pay for their product. As for me, the only time that I will spend money in their store is if I've been given a giftcard. You would think that Starbucks would lower the cost of their over priced coffees!!!! It would be the only way to get more people buying its lattes. [15] I remember the first time I went to Starbucks, it was in a book store, which was nice, you could read, and drink coffee. At the time, the coffee was quite good, but I have found over the years, the coffee has gotten more nad more bitter to the point it's undrinkable.[15] Starbucks, having turned the idea of a coffee shop into a cultural force, hit a significant roadblock at the end of 2007, when U.S. customer traffic dropped for the first time, raising questions about whether the company had overplayed its hand by expanding too aggressively.[2] Jerry from Baltimore - there's nothing "prefab" about good customer service, friendly partners, and a sense of welcoming. As for the comment regarding Starbucks 'bullying' local coffee shops out of business: in my experience this is yet ANOTHER misconception because Starbucks is a "multinational"in a nearby town, there is a Starbucks with at least two other coffee shops within spitting distance, and they've all peacefully coexisted for as long as I can remember. Angela from LA - are you aware that people who clean bathrooms are then able to wash their hands after they take off the gloves that they used? Yeah, I was AMAZED by this new concept as wellwe'll see if it catches on.[15] Pikes Place tastes like something I brew at home. If I wanted coffee like that I'd stay home - why pay for it ? In addition, the local coffee shop is quieter, cleaner, the chairs are more comfortable, they have live music on Saturday nights, the coffee is better and they know me by name. In all the years that I went to the same Starbucks they never knew who I was.[15] Starbucks is not like every other coffee place around, our best customers are actually business people and telecommuters, people who want quick service and high-quality product. Starbucks is not your local shop with live music and poetry reading, but rather serves a very wide range of customers who feel more comfortable in a Starbucks than they would being served by a punk with too many piercings. It is hardly too late.[15] Bocian said Starbucks would continue to focus on expanding internationally. It is too early to tell if Starbuckss other efforts to rejuvenate its business, including introducing new products like fruit smoothies, are working, said Zackfia, the analyst. The company has been successful with its introduction of Pike Place, a drip-blend coffee.[14]

It,s sad when a company like McDonalds has to add flavored coffees to their menue, Like they don,t have enough things on the menue It doesn,t even compare to starbucks taste. Starbucks is so much better, Why does a large corporation try to run another company out of business, Starbucks gives all their part time employes medical benifits, And above minimum wage. Most of their workers are college students working their way through school. McDonalds pays minimum wage and no medical benifits to their part time employes. Support your local starbucks, They are a great company.[48] Has Roasterie. Sure, people are cutting back on little things like their favorite specialty coffee drinks cos we're all suffering due to the high cost of gas. It's an unfortunate fact of life right now in these here United States. Starbucks is fine in a pinch, but I find their coffees to be bitter. They tear up my guts as badly as Folger's, another local producer. They over-roast, which causes the beans to release their oils, then pack it all up in air-tight bags which sit around for who knows how long before they're used. It doesn't take long for the beans to degrade.[15] One thing that a few people have pointed out, a cup of plain old coffee at Starbucks will NOT cost you 4 dollars, more in the neighborhood of 2. Those prices are for lattes, etc. I went to Dunkin Donuts this morning, since there's no starbucks on my way to work, and I paid $2.40 for a medium iced coffee (including tax). Their prices for coffee are comparable.[15] I agree most of the pastries are blah although the toffee almond bar is pretty tasty heated up. Regular Starbucks coffee (not espresso) is basically the same price as Dunkin and McDonaldsall of these people talking about their prices being too high need a reality check. In terms of their espresso-based drinks, their prices are actually LOWER than many of the small independent shops around here. Let's be honest, with this current economic depression - people have ceased to patronize fast food as frequently, and going out to eat (no matter if it's an everyday cup of coffee) has affected everyone. It's getting to the point where finding money to fill our gas tanks to GET to work is going to be more important than a cup of coffee.[15]

Starbucks used to be the place to go to get a great, bold cup of coffee. Not anymore! With Pike Place taking up 2/3 of the drip coffee menu, all that's left is this weak, tasteless brew. Look people, Starbucks' COFFEE is NOT $5 a cupit's the over-sugared, flavored syrup dominated, whip-cream topped, slightly brown milk that's $5.[15] Sure, the McDonald's atmosphere isn't much, but during a recession, a Starbucks latte is about as popular as $4 gas. The company is embracing its crafty past and Seattle roots by rolling out a new Pike Place blend. It's buying new espresso-makers and retraining baristas. In some outlets, it's brought back the $1 cup of coffee.[49]

I make it a point to spend $there before sbux. Maybe they shouldn't build a Starbucks across the street from a Starbucks. Not to mention their coffee tastes terrible. As a former Starbucks loyalist, I must say that it is a shame to see this once mighty company struggle. They did get a little big for their britches and regardless of the economy, their pricing model is downright aweful, not to mention their influx of political and/or religious ramblings on their coffee cups! I recently read a post from someone that had a very interesting observation about the lack of free wi-fi at SBUX locations.[15] McD's coffee drinks are just as expensive and are not as customized as starbucks. Starbucks should lower their prices, but so should all the other places. Economy sucks right now!! It's not just starbucks. Funny When I get a coffee from Starbucks it's the extra large (20 oz?) for just under $2.[15] I don't see how people can't see that it is because of our weak economy in this debt-filled nation that is causing this. It's not the price of Starbucks coffee (which is priced reasonably when you look at all that goes into itfair trade/organic/etc).[15]

Many of my friends have all done the same. People have started to pay for needs over wants: gas takes priority over high-priced coffeeit's as simple as that. I know, they could try lowering their ridiculous coffee prices. If SBUX could figure out the throughput problem, it would nail countless people like me who don't have 15~20 minutes to enjoy the Starbucks experience every time they want to drop in for a cofee.[15]

HARVEY HARTMAN, Food Industry Consultant: The smell has basically been lost, that coffee smell. Those sensory cues of what consumers are looking for are almost like more corporate rather than personal. What consumers are starting to sense is that Starbucks is losing this authentic, local, unique kind of real experience and has really become more bureaucratic, more mediocre, not as exploratory and as fun as it once was. LEE HOCHBERG: Starbucks also concedes its uniform store design suggests a chain of stores rather than the so-called third place, besides home and work, it once sought to become.[33] WEST PALM BEACH -- Self-described Starbucks addict David Zylstra isn't too worried about the prospect of one of his local Starbucks stores closing, as long as there's another one nearby for him to get his Venti coffee every day.[30] West Palm Beach resident Marni Bryson, 32, who left the CityPlace Starbucks with two coffees for herself in hand, said closing some of the stores that are too close together might be a good idea.[30] Way more consistent. Don't ever compare McDonald's/gas station/"cheap" coffee with Starbucks though because they are on two completely different levels. As far as the closings go, I think it is a good idea that they close some stores. There are just simply too many of them.[15] I only go to Starbucks because I do order the regular coffee and it is close to my work and when I travel in airports always there. Hope by closing stores they think long and hard about what made them great once. Now, I do not feel that same about them.[15]

Starbucks Coffee Co., which announced Tuesday that it will close 600 stores nationwide, said Wednesday that it will not publicly announce which stores will close.[50] Starbucks ( SBUX ) announced a major change of course yesterday when the hyper-expansive coffee retailer announced that it will shutter 600 under-performing stores and lay off as many as 12,000 employees as it comes to terms with an unexpectedly difficult operating environment.[38] Now I make my own. I don't what McDonald's some of the commenters are going to, but the stores around this area are too dirty to want to drink a cup of coffee in, that is if the employee behind the counter ever waits on you! Starbucks is a great supporter of environmental causes and supports small coffee growers overseas. I have yet to hear of this type of corporate responsibility by McDonalds.[15]

Times have changed, and not for the better for Starbucks. Its shares are trading at only 40 per cent of their highs. Starbucks, which has opened more than 2,300 company-owned stores in the United States since the beginning of fiscal 2006, is pulling in its horns. It now says it will shutter 600 stores, most of which were opened during that flurry of activity, and give notice to 12,000 full-and part-time employees.[41] Dean said Moxie Java hopes to have a company-owned store open between Meridian Road and Locust Grove on Chinden within 30 days and a franchise store operating near the intersection of Glenwood and State streets within 60 to 90 days. Paul Pennington, who has opened six Tully's franchises in the Treasure Valley since 2006, said he was surprised at the "aggressiveness" of Starbucks' cutbacks. "But you can't guess right on location every time," he said. Pennington said his own plans are to wait out the economic downturn before expanding any further. "We'll grow when it's appropriate," he said.[51]

Patrons sit Tuesday inside a Starbucks store in downtown Boston. While the company is cutting 5 percent of its U.S. locations, it still is going ahead with expansion plans in foreign markets.[12] Most of the closings, which include 100 that were announced previously, will be completed by next March, Starbucks said. The stores are located in "all major U.S. markets,'' the company said, without naming them.[31] Starbucks originally had planned to close 100 underperforming U.S. stores as part of a turnaround strategy begun when Schultz resumed leading the company in January.[12] Most customers whose Starbucks stores close will be a short walk from a caffeine fix, the company said, because many of the unprofitable stores were being cannibalized by nearby Starbucks locations.[12] Starbucks is not releasing a list of which stores are targeted. The company said that many of them are near other stores. Some of the stores were so close that they were “cannibalising” each other, chief financial officer Pete Bocian said.[1]

The company had previously planned to shut 100 stores, but the 500 more that will 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.[3]

"I was in California last week and I got a tour of the impact of subprime issues and the foreclosures around Starbucks stores, and it was stunning to me just how many empty houses there were." The company would not disclose the exact locations of the stores that will start closing starting later this year.[43] 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. The Associated Press contributed to this report.[3] The company is not disclosing specific locations of the closed stores "out of respect and dignity for our partners," Kelly Mattran, Starbucks' Chicago-based regional market manager, said in a statement, referring to employees.[2] Some 12,000 Starbucks employees, or roughly 12 percent of the company's worldwide workforce, will be affected by the shutdowns, Starbucks said, though it expressed hope that many could be assigned to other stores in the chain.[44]

Starbucks has said some of the employees affected by the closings will be moved to nearby stores. The public seems to have lost its taste for $4 (U.S.) lattes, especially when that same amount and more is needed to buy just one gallon of gas.[41] I bought an espresso maker of my own- it paid for itself in about two weeks. I'm amazed at the number of people that do not have the facts straight and comment that it's $5.00 coffee at Starbucks. For those of you who commented about the company and how well it treats it's vendors and employees thank you! They do provide a great benefit package which most smaller companies do not. Let's take a look at the economic impact that they have.[15] I love the company, what I do, and who I do it for. They're good to their employees, and despite what some may think, thrive on being good to their customers. I personally don't drink coffee, but my husband and sister do and they now prefer McDonalds over Starbucks.[15]

In a harsher economic climate, Starbuckss green-and-white mermaid logo is about to become a little less ubiquitous. The company, the worlds largest coffee chain, said Tuesday that it would close 600 stores in the United States beginning this year. It will lay off more than 12,000 employees in the process, the most in its history.[14] There were 2,496 stores in California and 625 in Florida in March. Those two states have been especially hard hit by the real-estate downturn and credit crisis. "By far, this is the most angst-ridden decision we have made in my more than 25 years with Starbucks," Chief Executive Howard Schultz wrote to employees in a message posted on the company's Web site.[12] In February 2006, Starbucks CEO Howard Schultz was asked on TV if opening 1,300 stores in the U.S. in a single year was "too much too fast."[13] In January, amid slumping sales at the popular chain, Chief Executive Howard Schultz revealed a transformation plan intended to win back customers. This included the shuttering of underperforming stores -- an effort that has been stepped up since Starbucks reported a 28% profit decline in the second quarter.[28] Out here on the sidewalk, I can't smell the coffee, but neither can Starbucks' customers inside. That's because Starbucks stopped grinding beans for brewed coffee in-store, instead using pre-packaged, pre-ground beans to cut lines and speed sales. They bought espresso makers that pull shots automatically, but are so tall customers can't see their drinks being made. Schultz says that stripped some of the theater from his stores.[33]

Our author well remembers the first Starbucks store and the first day of business, since he happens to have been the first customer. For instance, which coffee gang will you join? In an affluent neighborhood with working-class roots, it's the Stars vs. the Tulls.[49]

Do any of you complainers realize how many jobs Starbucks has created not only in the stores but the jobs created buy the suppliers. Let me point them out to you: The milk companies, espresso machines, baked goods, advertising agency, coffee mugs, tables, chairs, construction workers, etc. YOU GET THE DRIFT here! How many of you have some type of retirement fund rather it be stocks or mutual funds? Do you know if they have invested SBUX stock? Chanes are they have.[15] Twelve thousand souls are losing their jobs at Starbucks (SBUX), mostly because Howard Schultz let incompetents run his empire while he was occupied elsewhere. It will always be open to debate whether things would have been different if he had stayed on as CEO, instead of returning recently when things at the coffee company were getting bad.[37] HOWARD SCHULTZ: We've done quite a bit of research, more so than perhaps we've done in our history, over the last few months. What we've learned from the research is that the people who are not coming to Starbucks are either not coming as often or cutting out the occasion all together, but they're not going elsewhere for their coffee. It's not about the competition.[33] Schultz hates dissonance, and doesn't do gloom. After my article appeared--in fact, even before, since his minions had somehow obtained a copy early--he called to accuse me of "betrayal." I'd let down both him and Starbucks, he said. It's a curious thing to tell a reporter, but for all his success and savvy, Schultz is not just incredibly thin-skinned, but almost an innocent. He considers himself a philanthropist who happens to run a coffee company, and who happens to have become a billionaire doing so. Since he hasn't the slightest doubts about the fundamental goodness of either himself or his mission, he simply can't fathom anyone who might--or is paid at least to ask. Here was someone who cared less about whether people thought he was smart and competent than about whether they'd consider him a nice guy. Of how many executives could you say such a thing?[40]

What now? Starbucks is throwing a couple of Hail Mary passes. They've just introduced a new, brewed coffee called Pike Place, which tastes OK, and, like their other regular brews, costs the same as Dunkin's coffee. ("Swill," as Schultz rather ungraciously calls it in the current issue of Portfolio magazine.)[11] While behaving like a Gilded Age robber baron - just for a lark, Google the words "Starbucks" and "labor unions" or "fair trade" - Schultz positioned Starbucks as a countercultural concern. The company hyped its sofa-stuffed lounges as a new, American "third place," an alternative to work and home. I'm always amazed at the high-class hobos who clutter up Starbucks, the MacBook "novelists," and the Bluetooth-enabled "consultants," nursing their lattes and milking the Internet.[11]

''The recent announcement of Starbucks closures is absolutely focused on the U.S.,' said a spokeswoman for the company. ''Starbucks will continue to grow internationally, whether it's in new locations or in existing ones like Ireland.[5] "The stores targeted for closure are spread relatively proportionally across all major U.S. markets," Starbucks spokeswoman Deb Trevino said in an e-mail to ABC News. "Consideration was given to the impact of current and anticipated economic trends in making this decision."[43] Starbucks (NASDAQ: SBUX) said the stores set for closure are spread across all major U.S. markets.[18]

Several years of rapid expansion caught up with Starbucks last year as U.S. store traffic slowed, shelves inside stores became cluttered and two price increases drove away some customers. You can use this link on the day this article is published and the following day.[16] A cavalcade of economic troubles, from imploding housing markets to rising gas prices, has pinched consumers, hurting not just Starbucks but nearly all retailers. The chain is struggling to attract customers for the afternoon frappuccinos they once bought eagerly, said Sharon Zackfia, an analyst at William Blair Co. "I dont think its overly surprising," she said of the announcement. "These stores were in aggregate unprofitable."[14] Customers place an order Wednesday at the Starbucks kiosk in CityPlace in West Palm Beach, one of three stores in the shopping center. Closings could focus on states, including Florida, that 'opened a lot of these stores during the housing boom,' analyst John Owens said.[30] Analysts believe closing the 600 stores is actually a good move for Starbucks because it will eliminate underperforming stores and clear out oversaturated areas. "They just got way out ahead of themselves in the growth curve," said John Langston, senior analyst with Dallas-based Hodges Capital Management Inc. "They put stores in places they didn't need to go."[30]

Steven Kron, an analyst at Goldman Sachs, pointed out in a research note that while short-term investors may be enthusiastic about store closings, long-term investors still need to know more about how broader business trends play out. He has made no change to 12-month price target. Starbucks still has a lot more work to do to prove that it's righting the ship.[13] Given the environment we're in, nothing really surprises me anymore." Sharon Zackfia, an analyst with William Blair & Co. in Chicago, said she thinks Starbucks is closing most of its unprofitable stores, except for new locations still ramping up.[12] Analysts have long been wary of Starbucks' expansion plans, warning that opening too many stores in close proximity would hurt existing locations and make it harder for new ones to make money.[2] One location that has opened since 2006 is the new Starbucks at the Karcher Mall in Nampa. That store, however, shouldn't be a candidate to close because it's the only company-owned Starbucks in Canyon County and has been doing "robust" business since it opened, said Craig Carter of Scott Peyron & Associates, a Boise public relations firm that represents the mall.[51]

Schultz and other believers insisted that the new stores wouldn't cannibalize business from existing stores, but too much of a good thing almost always becomes too much of a good thing. Starbucks also made a wrong step with its move into merchandising, trying to boost revenue with sales of music, movies and books.[52] Everyone used to marvel at Starbucks' ability to boost each store's sales every year while it added new stores across the street. Internationally, they'll still grow like this.[8]

When McDonald's was struggling in late 2002 and early 2003, it announced the closure of nearly 700 stores in order to weed out less-profitable operations and focus on improving returns at existing stores. To drive traffic to those stores, the hamburger heavyweight then buckled down on product development, rolling out new offerings like salads. Starbucks is also kicking up its R&D machine, debuting, among other things, smoothie-style drinks later this month.[13] While news of the closures was not a surprise – the Seattle coffee company had warned that it was keeping a “watch list” of stores and might close more than the 100 previously announced – the number was larger than expected.[1] Starbucks Corporation announced Tuesday a decision to close approximately 600 underperforming company-operated stores, with the timing of the closures dependent on finalizing third-party agreements.[26] Earlier this week, Starbucks announced it would close 600 underperforming stores during the next year starting later this month.[9] KINGSTON - Starbucks Corp. said on Wednesday that it has not yet identified which stores it will close under a consolidation plan announced this week.[44] Starbucks Corp. is still brewing a new Erie store despite plans to close 600 of its other stores. The planned Starbucks at West 12th Street and Pittsburgh Avenue won't be affected by the announcement made earlier this week, said Jack Munch, director of commercial leasing and development for Baldwin Brothers, manager of the project.[25]

Starbucks also cut the number of company-operated stores it will open in 2009 by half, to fewer than 200. The company did not adjust its plan to open fewer than 400 stores in 2010 and 2011.[1] Starbucks also said it expects to open fewer than 200 company-operated stores in the United States during the year beginning Sept. 30.[47]

Starbucks said 70 percent of the stores slated to be closed had opened since the start of the 2006 fiscal year.[29] Approximately 70 percent of the stores being closed have opened since the beginning of fiscal 2006, Starbucks said in a statement.[19]

Starbucks said that the store closings will be spread across major U.S. markets and that 70 percent of the targeted stores were opened since the beginning of 2006.[2]

Starbucks will take an after tax write-down of between $328 million and $348 million related to the store closings.[48] Starbucks says it is trying to cull''unprofitable stores from the franchise and expects to book''$200 million of asset write-offs in the third quarter related to the closings.[15]

A Starbucks spokeswoman said the company will not reveal which stores will be closed or give details on which regions might be most affected by the closings.[23] There are 32 Starbucks locations in Idaho, including 19 in the Treasure Valley, according to the spokesman, who would not comment on whether any are candidates for closure. "The criteria the company is using is stores that are not profitable, or that it's believed will not have an acceptable return in the future," the spokesman said.[51] A Starbucks company statement describes the stores to be closed as not profitable and "not projected to provide acceptable returns in the foreseeable future."[10]

The company says it will try to place workers from closed stores in remaining Starbucks.[46] Starbucks spokeswoman Valerie O'''Neil said about 12,000 workers, or 7 percent of Starbucks''' global workforce, will be affected by the company closings, which are expected to take place between late July and the middle of 2009.[3]

Shares in Starbucks rose as high as $16.53 in after-hours trading Tuesday after closing at $15.62. They have fallen about 24 percent this year.[14] Starbucks, whose shares have plummeted more than 50 percent in the past two years, rose 4.7 percent to $16.35 at 8:51 a.m. before the start of Nasdaq Stock Market composite trading.[6]

Shares of Seattle-based Starbucks jumped $1.02, or 6.5 percent, to $16.64 in after-hours trading after losing 12 cents to close at $15.62.[21]

On the heels of Starbucks Corp.' s announcement this week to close 600 stores, the fate of the local store is still uncertain. 'Out of respect and dignity for our partners and our desire to share this information with impacted partners first, we are not publishing a full list of the stores,' said a Starbucks spokesman in an e-mail.[53] Previously, Starbucks had announced it would close 100 poorly performing stores. With nearly 600 stores now slated to be closed, it is almost as if Starbucks faces its own version of the collapse in the housing market.[43] Starbucks announced Wednesday the closure of 600 stores and plans for staff cutbacks after a drop in sales.[33] Schultz has been working frenetically to turn things around at Starbucks. Since his return to the helm, SBUX has dropped breakfast items from its menu, announced a reduction in planned store openings and the closure of 100 under-performing, company-owned stores.[38] Soon after, Schultz targeted 100 stores for closure -- a number that grew by 500 when firm plans were announced on Tuesday. He has also slashed plans for store openings and shifted the company's most ambitious expansion efforts to international markets. "At this point, management has decided that 2008 is a wash and to throw in everything but the kitchen sink to get ready for growth in 2009 and beyond," said William Blair analyst Sharon Zackfia.[22] Chief Executive Howard Schultz returned to the CEO post in January to get the company back on track, and immediately announced 100 store closings and a slowed pace of expansion.[16] Not even Howard Schultz can escape gravity. Those hard facts were demonstrated in brutal fashion Tuesday when company founder Schultz announced that 600 stores in the U.S will be closed this summer, affecting as many as 12,000 workers.[52]

"Throughout the history of the company, we have always aspired to put our people first," CEO Howard Schultz said in a statement. "This makes our decision to close stores difficult, because it is disrupting the lives of the people who have worked so hard to deliver superior service to our customers."[47]

'''In January, we committed to transforming the company through a series of critical and strategic initiatives to improve the current state of our U.S. business and build the business for the long term,''' stated Howard Schultz, Starbucks chairman, president and CEO who took the company back over in January.[17] In April, Starbucks CEO Howard Schultz told Terry Moran in an interview for "Nightline" that the coffee business had been affected by the mortgage crisis.[43] My cappuccino--I asked for it "semi-dry," to get it the way it should always be made, without lots of preliminary adjectives--was excellent. After rummaging around for one, then rinsing out the dust, they even served it to me in a genuine ceramic cup. There are those who never liked Starbucks, who think its beans are too "burned," etc. Others, like me, once patronized it often, but soured on the place as it turned sloppy and mechanized. Whatever business Schultz lost from us he more than made up for as the teeny-boppers arrived. The real problem comes from Americans suddenly pinching their pennies, and going to McDonald's or Dunkin' Donuts or 7-Eleven instead. This morning reminded me anew of Howard Schultz's great accomplishment: he has created America's civilian USO, a home away from home. There will now be a few fewer of those homes, spread out more reasonably, but neither Wall Street nor OPEC nor some competitor can diminish what Schultz has achieved.[40] HOWARD SCHULTZ, 54, is the founder of Starbucks and serves as our chairman, president and chief executive officer. A t my local this morning, I had to struggle to find a parking place. Inside, people played with their children, lovers flirted in the corners, and bloggers huddled over their laptops.[40] HOWARD SCHULTZ: Perhaps for the first time in our history, the downturn in the economic cycle and the pressure that the consumer is under has affected the frequency of visits of how often people have been coming into Starbucks.[33]

HOWARD SCHULTZ: We somehow evolved from a culture of entrepreneurship, creativity and innovation to a culture of, in a way, mediocrity and bureaucracy. LEE HOCHBERG: Schultz, who left the CEO position in 2000, was considered the architect of Starbucks' phenomenal rise, but he was brought back this January to try to give a double-shot pick-me-up to his sagging $9 billion company.[33] In February, the company fired 600 employees and conducted a in-store retraining program to try and revive the Starbuck Experience, as CEO Howard Schultz has called it.[15] In the go-go Howard Schultz years of the Starbucks saga, the Seattle company grew to 16,000 outlets and became a cultural phenomenon.[49] In January, Starbucks brought back founder and chief executive Howard Schultz to turn around the company.[22]

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Taking a page from Jamba Juice, Starbucks plans to start offering "healthy," protein-boosted smoothies and a new frozen drink, which Schultz is calling "a game changer in the coffee space." It's hard to change a game that's already over, but there's no harm in trying. Free plug I spotted this line in Portfolio's Starbucks article: "By now, many of the coffee snobs have gone elsewhere." [11] With the economy in the tubes, who knows how long though. Hate to break it to those offended by the new Starbucks logo you are having no effect. Coffee at starbucks isnt $5.00? Its only $5.00 if you add like 5 extra shots of espresso.[15] It some small way, Starbucks is responsible for its own demise, and the malaise the economy is feeling as a whole. It ushered in the believe that a cup of coffee, no matterwhat you do to it, was worth $5. its not. It never was.[15]

The fact that the economy subsequently soured, job losses mounted, wages stagnated, house prices dropped sharply, stock portfolios took a beating and gas prices surged, didn't help though, an unfortunate set of circumstances that Starbucks could not have foreseen especially at a time when everything seemed to be going so well. Nor could it anticipate that McDonald's Corp. would enter the specialty coffee business and undercut prices.[41] Baristas at Starbucks are like no others. They are 99% of the time happy, cheerful and willing to admit when something was done incorrectly and fix it. They love their jobs and they look forward to going to work every day. What other company can you truly say that about? Certainly not Wawa, McDs or Dunkin Donuts! It's not just about drinking a beverage, it's about having people treat you with respect. Honestly, it doesn't surprise me the reactions to Starbucks on this board or anywhere.[15] The profound miscalculation is based on the notion that the number of customers who would come to Starbucks is nearly endless. The same idea has ruined a number of companies and industries over the years. It is the trap of thinking that the concept behind a firm is flawless and that execution is not as critical as the original idea. That way of thinking eventually costs a lot of people their jobs.[37]

Starbucks is screwed. I don't know for certain, but if they expanded during the peak of the real estate boom, and now need to sell off property, it will eat them alive. Starbucks was just a flash in the pants. who in their right mind pays $5 for a cup of average coffee? I never did. What is the big deal? Has anybody considered that a Moca Late goes for about $40 a gallon? At that rate it would cost $1000 to fill up your basic SUV. The ride is over.[8] Coffee costs a little under $2 most places, and thats what it is at Starbucks.[15]

I also support my local coffee shops when I want just a plain cup of Jo. It is possible to support both you know. Coffee Bean has ALWAYS BEEN BETTER. Starbucks is finally getting what they deserve. I think that Iowa was the last place to get Starbucks, but once they arrived they oversaturated areas. I only get a specialty drink infrequently and only do this when I get a gift card.[15] Seattle, Washington - Coffee giant Starbucks is to ice 600 of its U.S. coffee shops as economic problems hit the ability of consumers to pay 4 dollars for a cup of coffee.[54] Starbucks is incredibly LAME. Why would anybody sit down for coffee in an environment that is replicated 7,000 times over throughout the U.S. I personally hope that the entire franchise goes under and paves the way for independently owned coffee shops to spring up. It's called individuality, try and find some.[15]

This should not be too distressing to those that did not loose employment. Starbucks moved too fast with alot of competition in the field; not seeing the forest for their trees they overgrew their niche. It is enough to have good coffee shops in the community without the stress of which one is best. This is a place where variety is good.[8] Starbucks ? Are you listening ? I now go to a neighborhood coffee shop. The event that pushed me over the edge was the switch to Pikes Place. That coffee is terrible.[15]

As one market researcher puts it, "Starbucks stopped being just a coffee shop and became a confusing mess of things for sale." For a decade, Starbucks had a magic formula, its stock was golden, and Schultz became a billionaire.[52] YUCCA VALLEY The Starbucks corporation will close about 600 of its coffee shops in the next eight months, but isn't telling which brewers will get the boot.[10] A customer walks past a Starbucks Coffee shop in the Adams Morgan neighborhood of Washington, D.C.[13]

Something else that gets overlooked or goes unnoticed, more likely is the high level of community involvement and corporate social responsibility that Starbucks has. They pay top dollar for coffee beans that other coffee companies undercut in pricing, they support and nurture small coffee farmers, and constantly strive to bring the best possible cup of coffee/latte/cappuccino to our customers ALL of the time.[15] Besides, there are so many better places for coffee than Starbucks. There is 6 of them within ten blocks of my midtown apartment in New York. Hopefully this will give the little guy a chance in the market. Starbucks never had much soul, but for a long time when traveling I could count on a fresh strong cup of coffee when I saw their sign.[15]

The only times I have ever had to endure the "Starbucks experience" have been on road trips when one of there stores had been the only thing available on the FL Turnpike reststops when I needed a coffee.[15] Support your local cafes and coffee shopsStarbucks only offers an overpriced bitter brew and prefab "experience". Again, support your local owners who have been pushed around and out by these bullies. "The Christian boycott of Starbucks did not help''' Next time they should think twice before creating offensive statement on their cups regarding our faith.[15] McDonald's offered better coffee at cheaper price and I never could "get" the so called Starbuck experience. I don't understand how these places cannot be profitable: They're getting upwards of three bucks for a paper cup filled with a nickel's worth of water strained through some coffee beans.[15]

Admittedly, there have been some complaints about the introduction of the milder "Pike Place" filter-coffee blend. On the firm's popular new customer website, MyStarbucksIdea.com, the main concerns are about the quality of the food sold by Starbucks and, above all, its prices. Encouragingly for Mr Schultz, there are also many positive suggestions, from serving vegan food to introducing a loyalty card, which suggests that plenty of customers still care for Starbucks enough to give him a chance to win them back--recession or no recession.[7] By the end of the month, Albert Lea'''s Starbucks store will be no longer. Robert Hoffman, former manager of the Albert Lea Starbucks, said he received about a half dozen calls Wednesday from some of his former employees who told him the news.[3] One possible bit of good news for employees of the Yucca Valley store: According to the company, about 70 percent of the stores that will be closed opened since 2006.[10] About 70 percent of the stores slated for closure are relatively new, having opened since the beginning of fiscal 2006, according to the company.[45] The company was not offering any more information Wednesday, except that 70 percent of the stores that are targeted for closure have opened since fiscal 2006. Closures will begin this month, according to a company spokesman.[51]

The coffee company is offering few details, except that most stores targeted for closure have opened since 2006.[51]

The majority of the stores scheduled to close, which include the 100 stores previously targeted in January for closure, will do so some time during the remainder of fiscal 2008 and the first half of fiscal 2009, though timing of the closures is dependent on finalizing third-party agreements, the company said.[45] 2009 will be the first time Starbucks will open more international stores than domestic ones.[33] The move isn't that surprising given Starbucks' recent weaker-than-hoped sales. Still, it is a big change from its famous strategy of opening stores lots of stores, many in close proximity to each other. "Starbucks, known for sometimes going so far as to open stores across the street from one another, has recently acknowledged that it may have lost some of its luster during a long period of rapid store openings and expansion into everything from breakfast sandwiches to movie promotions," writes senior writer Allison Linn.[48] Starbucks Corp. said in a press release on its Web site that it will close approximately 600 "underperforming company-operated stores in the U.S. market."[42] As of March, Starbucks Corp. had 16,226 stores across the globe. Of those, 7,257 were U.S. company-operated stores, 600 of which will close.[30]

Starbucks plans to close the company-operated stores by the end of March 2009.[22]

"The deal is going forward," Munch said. Starbucks did not say which 600 stores will close or if any of the three Erie stores will be among them.[25] Most of the 600 stores set to close were opened in late 2005 and 2006, Bocian said on the call with investors and analysts. During that time, more than 50 percent of the new stores had drive-through service, he said.[6] Seventy percent of stores drafted to close have been open fewer than three years. As a result of the decision, many full- and part-time employees will be laid off if they cannot be placed at nearby locations, Schultz wrote. "By far, this is the most angst-ridden decision we have made in my more than 25 years with Starbucks," he wrote.[34] The closings will result in roughly 12,000 jobs being cut. Bocian said the "vast majority" of the shuttered stores have other company-operated locations in the immediate area, and many of the affected employees will be placed at those open stores.[2]

The company still plans to open fewer than 400 stores in 2010 and 2011, according to the Associated Press. "Just because they're closing underperforming stores does not mean that they will altogether halt opening new stores," Munch said. "They like that area of town (around the new building site), they particularly like being able to take advantage of the morning commuters, and they share the feeling that the corridor is going to keep getting better and better."[25] The company has yet to break the news to many of the affected stores. Mattran said individual stores will receive notice from their district manager or regional director about 30 days before they go dark. The remaining 6,600 company-owned stores in the U.S. will also be notified that they are staying open.[2]

Zackfia said the company could have shown more discipline, though the impact of the economic downturn was difficult for many companies in consumer-related sectors to anticipate. The decline in consumer spending on both big purchases and little indulgencessuch as $4 lattescould have shortened the timeline for new stores to establish a good track record, Zackfia said. The company said it looked at several criteria in targeting stores, cutting those that weren't profitable and weren't expected to "provide acceptable returns in the foreseeable future."[2] The company said it would also limit its new stores to 200, and that it expected to eliminate some 12,000 workers with the closures.[54]

Skeptics have wondered how long the company could continue packing new stores so closely in some cities that coffee addicts could choose between two or three stores within a couple blocks.[52]

Had things turned out a little differently, you might have sipped your morning latte at Cargo House. Or maybe Pequod's. Back in the early 1970s, those were two of the names considered for a new coffee company, which finally settled on Starbucks.[49] Starbucks is an environmentally friendly, farmer friendly, fair trade company. It's just cheaper than your local coffee house would be and more convienent.[15] I also drink Starbucks coffee. Not because it's "cool" or "trendy", but because the product is always fair trade and I like the taste of the strong coffeeswhich is what Starbucks is known for. For those of you who drink Folgers, Maxwell House, and all that kind of coffee of course you're not going to like Starbucks. It's much stronger than those. Don't bad mouth it just because it's not watered down like the commercial brands are.[15]

We are a society who thrives on convenience and expect top service for very little. It's the same reason stores like Walmart thrive- we want it all and we want it cheap. It's also why customer service has declined so severely and why rudeness has become the norm. It's true that Starbucks may have over-expanded and for that, they have learned a valuable lesson and are on a correction course.[15] "If all the stores were closing, then I would have a picket sign and would be marching around," said the 56-year-old Boynton Beach resident, who stopped in at the Starbucks in CityPlace.[30] SEATTLE (AP) — Starbucks Corp. has announced it's closing 600 underperforming stores in the United States.[46] The closings were not unexpected, as Starbucks had previously indicated 100 underperforming stores would be closed. Analysts have applauded Starbucks for its willingness to address its problems. Sharon Zackfia, who follows Starbucks for William Blair Co., interprets the announcement of more store closings "as a clear signal that management is willing to make tough decisions regarding its store portfolio and stick by its return on investment hurdles - rather than just grow for growth's sake."[41] In a conference call right after the announcement, CFO Peter Bocian wouldn't give specifics about what kinds of stores are closing (rural? drive-thrus?) or how it will affect earnings. He did say he expected profits would improve, and - pay attention to this part that much of the revenue will be recovered by nearby Starbucks locations.[8] The union called for Starbucks to disclose which locations are being closed and outline a severance plan. Starbucks ex