Tuesday, July 01, 2008

That And $5 Will Get You A Starbucks


An entire Starbucks. LA Times:
Starbucks plans to close 600 U.S. stores, fire 12,000
Starbucks Corp., the world's largest chain of coffee shops, plans to close 600 "underperforming" U.S. stores and eliminate as many as 12,000 jobs as it tries to reverse declining customer visits.

You'd think they'd learn something from home sales rates. Declining sales? LOWER PRICES.

14 comments:

Agent #777 said...

Let me be the FIRST to say that you are making this issue far too simple, Dawg!

Agent #777 said...

I was being somewhat facetious above, but now I decided I did not want to go into a big rant on this to explain.

Basically I agree with you, but I am not sure how much it would help their scenario.

For the record, I have only purchased anything other than a paper from Starbucks once in the last 6+ years. It is a treat I can do without!

Rob Dawg said...

I think I've had one drink and one of their new coffees free.

You are correct that the next Boston Chicken cum Krispy Kreme aka Starbucks cannot do anything to stop what is about to happen to them. "To them" is a bit mild as most of the sh¡tstorm is of their own making. I've been pushing the meme that CRE is far worse than RRE and this is just start. CR at CalculatedRisk and I have long disagreed on this point. 600 storefronts isn't a blip on the radar but I suspect that there aren't two dimes of credit out there for any CRE of any kind for years. This kind of news changes lenders' perceptions following the butt whipping they are taking in RRE lending.

Rob Dawg said...

Starbucks made its own weather in many specific locales. Not only did they take up lots of premium storefronts but they caused other businesses to adopt business models that included such time tested strategies as 'there's a Starbucks next door to generate foot traffic.' That's gonna leave a mark.

Question for the group: Is Starbucks an exurban phenomenon? They resisted drive-thrus and still preferentially locate pedestrian friendly and urban.

Son of Brock Landers said...

I'm a Dunkin Donuts New England boy, so seeing this warms my heart. I welcome this move, not just for Starbucks but for all of retail. Someone has to start the closings. In downtown Indianapolis, there are 2 in the same monument circle and another store 2 blocks away.

The chain I eagerly await closings of is Dick's Sporting Goods. At my last job, I worked on a service project involving them, and when my firm heard their growth estimates, we discounted their numbers by 25% and it still was outrageous for percentage growth, total stores opened, and employees hired. We arranged the contracts to protect us from the new hires because we doubted the rapid expansion would stick. Time will tell.

VegasUberAlles said...

Hi Rob! I used to be simi.uber.alles but now I'm back in Vegas. Hot as hell today but rent is cheap.

There's a drive thru SB in Simi Valley (NW corner of 1st & LA). It's had the drive thru since at least early 2006. Also one just down the street from me here (far NW Vegas) and one more I can't recall, but they're definitely more common now. They're also in Albertson's, and near grocery store anchors. Sometimes there's one inside the grocery store, and another one across the parking lot from it.

600 store closings is a drop in the bucket. A couple years ago, they were talking about 40000 worldwide.

Akubi said...

Starbucks sucks. I have another new blog.

Akubi said...

Let's try this again.
If the link doesn't work I was right about stupid blogger BS.

spooq said...

Taylor Wimpey, a UK home-builder, has gone from £5/share to 30p in just over a year. They asked for a half a billion quid from the market today and were refused. I'd hate to see what would happen to the UK if they hadn't had that decoupling from the American economy. ;) FTSE 100 @ 5k, anyone? Nice to see the gold price is looking a little more realistic again though. It's going to be interesting to see how the US, with its drop-pants-now scheme, will compare to the UK, with its drop-pants-later scheme, in a few years time.

Starbucks make very bad coffee, and that's coming from someone who will happily drink Nescafe instant. No sympathy for companies with such a low quality product.

What does CRE/RRE mean?

Agent #777 said...

Commercial Real Estate and
Residential Real Estate

Peripheral Visionary said...

Meg Swan: We met at Starbucks. Not at the same Starbucks, but we saw each other at different Starbucks, across the street from each other . . .

Hamilton Swan: I remember what I was drinking when I met you. It was a grande espresso.

Meg Swan: That's right. And I thought that was really sexy.

Peripheral Visionary said...

My comment: such scenes of conjugal near-bliss are, for better or for worse, not likely to be repeated. SB severely overbuilt, and is now paying the price for that (as are their employees--what are all the tattooed/pierced post-arts degree twenty-something bohemians going to do?) SB is facing the perfect storm: dwindling discretionary income, overcapacity, and the inevitable fading of a once prestigious brand (shades of Krispy Kreme!)

If they want to move more product, they can cut the price--but that will hasten the fading of the psuedo-luxury brand appeal. That's the problem with the faux luxury brands: once the aspirational consumers lose buying power, the brand faces an impossible choice of raising prices (and losing business) or lowering prices and losing perceived status (and losing business.)

The only people celebrating here are the competition. One of the very few things going well for Carlyle these days is the fact that they still have Dunkin Donuts . . .

Akubi said...

Meg Swan: We met at Starbucks. Not at the same Starbucks, but we saw each other at different Starbucks, across the street from each other . . .

Best in Show! A classic.

Rob Dawg said...

"Oh, it's like that is it?" (Heh heh heh)

Good movie.