Starbucks to Close 600 Stores
First off let me say, Finally! It’s about time Starbucks closed some of these damn stores. Their growth has been completely out of control and unrealistic. Do you really need Starbucks stores right across the street from each other and within eyesight of each other? I for one will be glad to not see a Starbucks on every street corner.
However, as a side let me also say that doesn’t their expansion and now closure sound somewhat familiar to those of us in the meal assembly industry? And specifically doesn’t it sound like one company in particular? Think back to 2006…
Just in case it wasn’t apparent, not only did Dream Dinners try and model their expansion and marketing techniques after Starbucks, they hired several of their corporate office lackeys from within the ranks of Starbucks itself. It was also right around 2006 (same time that Starbucks went nuts and opened so many needless stores that they now have to close them) that Dream Dinners went around opening so many needless stores that they have started shutting down.
Dream Dinners followed that same pattern of trying to open as many stores as possible in the shortest amount of time possible with the unrealistic aim that by having their name on the sides of and in the windows of so many stores that they were building name recognition and marketing themselves. Having 4 stores in the same area was only strengthening their presence and making it convenient for people to come in. The brain trust they lured away from Starbucks kept the same walk-in mentality for making once a month meals as they did for 3-minute coffee. Brilliant!
The main difference however is that with Starbucks shutting down some stores they are displacing some coffee slingers making a few dollars and hour who with their highly tuned skills will land back on their feet in plenty of time to sling some eggs and bacon or maybe drop another fry basket. Meanwhile, Dream Dinners owners will lose their homes, cars, college funds and who knows what else because their corporate thinkers didn’t make a distinction between a $5 cup of coffee that you buy on a whim versus $220 worth of meals you buy once a month if you happen to put it in your planner.
It’s going to cost Starbucks around $400 million to deal with their over-expanding desires, how much will it cost the DD owners to deal with Stephanie and Tina’s expansion folly?
Another fine example of what happens when you get greedy and let unbridled expansion be your master.
2008-07-02 — Starbucks Corporation has announced the next step in its multi-faceted plan to transform the company, with a decision to close approximately 600 underperforming company-operated stores in the U.S. market. This decision is a result of a rigorous evaluation of the U.S. company-operated store portfolio and includes the 100 stores targeted for closure in the company’s previously announced plans. In addition, Starbucks now expects to open fewer than 200 new U.S. company-operated stores in fiscal 2009.
The stores identified for closure are spread across all major U.S. markets with approximately 70 percent of them opened since the beginning of fiscal 2006. The executive and field leadership teams used several criteria to identify stores for closure that included locations that were not profitable at the store level and not projected to provide acceptable returns in the foreseeable future. In addition to site and market-specific criteria, consideration was given to the impact of current and anticipated economic trends.
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