Earlier this evening I sat outside with a neighbor discussing a wealth of topics including the news that Starbucks will be cutting “up to 12,000 jobs” and closing “600 stores.”
It’s a sign of the times to come as consumers continue to cut back on even the littlest of extravagances to make sure they put gas in the tank. Not only has Starbucks been “grappling with the slowing U.S. economy and consumer spending” but they have also had “major competitors like McDonald’s Corp” stepping up and “attacking its core business.”
Starbucks said the closures are spread across all major U.S. markets and that 70 percent of the targeted stores have been open since the beginning of fiscal 2006. The accompanying job losses would represent about 7 percent of the company’s global work force.[...]
Starbucks said the 600 stores are either unprofitable now or are not expected to meet future return thresholds. All of the targeted units are close to another company-operated store, Bocian said.
“This is validating some of the critics who said they were opening stores too close to one another,” said James Walsh, an analyst at Starbucks investor Coldstream Capital Management.
Those critics complained that the company had overbuilt in the United States — particularly in major urban areas like Manhattan, where it is not unusual to see several Starbucks in a single city block.
The Seattle-based company was also an aggressive builder in California and Florida. Those states experienced red-hot growth during the housing boom and have been hardest hit by the U.S. housing downturn.
My neighbor and I counted the Starbucks in our San Fernando Valley neighborhood and figured there are between 6 – 8 in a roughly 1 1/2 mile radius from our apartment building. The newest Starbucks, right at the end of our street just opened a few months ago.
And meanwhile, as corporate giants are struggling for a piece of the pie in the this economic downturn/recession that is predicted to go on for some time, small business owners are hanging on for dear life… And most like myself gave up on the little extravagances like a cup of coffee from Starbucks ages ago.
I feel for the folks losing their jobs at Starbucks, who will have a tough time in the current job market finding another job. Thank BushCo for not rallying to do something to fix the economy ages ago. It’s going to be a long hot summer and and even colder winter for those joining the ranks of the un-employed.