Subscribe to RSSCoffee Futures Rise to Over $4 a Gallon
Coffee is something I never could get into drinking. I tried. Especially in high school and college. Nowadays, I do enjoy going for the atmosphere and conversation, but admittedly have a hard time paying $4 for a chai tea.
I thought that trendy season would come to an end by the time I graduated, but I was wrong. There are eight Starbucks stores within five minutes of my house, and one more on the way. Well, maybe not.
Starbucks announced yesterday that they are closing 600 stores (8.5% of their portfolio) due to their rapid, perhaps overreaching, expansion. This change will affect 12,000 loyal coffee students that arise at 4:30am to serve coffee to the masses on their way to work.
If I had to imagine one organization that might be untouchable in this economy, it would have been Starbucks. When you put together a daily desire of coffee for many Americans paired with a trendy atmosphere; it didn’t seem that much could slow them down.
In 1982, Starbucks started with just four stores. Today, before this change, they have 15,012. Their success is apparent.
How then do we view this most recent cutback?
In my humble opinion, it is perfectly normal, and savvy, for organizations, whether rapidly growing or even dated, to step back and evaluate their work and position in the market. Are they still in their hedgehog? Are they fulfilling the mission they set out to do? Is their growth healthy?
Analysts of every stripe have bantered their opinions to those questions since Starbuck’s news, and even before. Some have the correct answers. But the point is that such a review, done internally, is always necessary from time to time. If it is not done by the company, it will happen by the free market; but it does always happen.
Starbucks estimates this cut will cost $348 million, but that the restructuring will end up paying $100 million. And that’s a lot of coffee, if you ask me.
Tags: capitalism, closing, coffee, commerce, cutback, expansion, Starbucks