A couple of posts ago, I talked about how people in the United States are spending less and less money on coffee. At that point, I was only focused on the consumers. These past few days, however, I have been reading a lot of news how the coffee chain giant, Starbucks, is feeling a bit under the weather. Could it be that they are actually feeling the effects of consumers spending less on coffee?
The Detroit Free Press reported last week:
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.
Starbucks said in a statement that 70% of the stores to be closed were opened after the start of 2006. The locations set to close include ones that “were not profitable and not projected to provide acceptable returns in the foreseeable future,” it said.
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.
As you can imagine, this bit of news has stirred up a lot of controversy. Starbucks is perhaps the most popular – if not the most loved – coffee chain in the whole of the United States. It employs thousands and thousands of employees and with these impending closures, countless people will be affected.
What are your thoughts on the current situation Starbucks is facing?