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Starbucks To Close 600 Stores

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Starbucks To Close 600 Stores

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Starbucks To Close 600 Stores

Starbucks To Close 600 Stores

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Starbucks Corp. says it will close hundreds of stores it opened over the past three years. The company did not say where the stores were located, but all together, 600 underperforming stores will close and 12,000 full- and part-time positions be cut.

ROBERT SIEGEL, host:

It appears that Wall Street appreciated the decision by Starbucks to close 600 stores. Shares in the company ended up yesterday and up slightly today, but as for the average venti soy latte drinker, do they appreciate it? Well, NPR's Robert Smith met up with some caffeine addicts in Manhattan.

ROBERT SMITH: New York has a theater district, a garment district, even a floral district. Well, you can consider 45th Street and Times Square the mermaid district. From the corner you can see three Starbucks logos from three different stores. No word if any of these will be closed, but Crystal Shachter(ph), carrying her venti iced coffee, says she will deal.

Ms. CRYSTAL SHACHTER: I think there's absolutely way too many Starbucks stores, and I don't think it'll be problematic at all to thin them out a bit.

SMITH: But that means you may have to walk an extra 10, 20, maybe even 30 feet.

Ms. SHACHTER: I think I can live with that. Yeah, I can work off the extra calories that I'm consuming by actually drinking another Starbucks coffee. So I think it all evens out in the end.

SMITH: Shachter doesn't claim to be a marketing expert, but she agrees with what analysts say the company did wrong. She knows that as Starbucks expanded its number of stores and products, it lost some of its cache.

Ms. SHACHTER: Going into furniture, breakfast sandwiches, coffee mugs, coffee makers, it's probably spreading it a little thin.

SMITH: And yet here she is, Starbucks cup in hand, when she could have walked across the street for a simple cup of Joe at the diner. She admits she likes the consistency, and that's the thing about talking to Starbucks customers. They love the place, they hate the place, but they won't be changing loyalties anytime soon. Like Manning(ph) says, he doesn't think there are too many Starbucks, just some bad choices by the company. He specifically hates those suburban drive-through joints.

Mr. MANNING: Those locations that they failed in are probably because they've tried to be more fast-food-esque as opposed to sticking to their core value of, you know, come in and enjoy coffee and sit down and enjoy yourself.

SMITH: Clayton Harrison(ph) emerges from one of the Starbucks on 45th Street with his iced coffee, and he says he'll stop at whatever coffee shop is closest, even a Dunkin' Donuts.

Mr. CLAYTON HARRISON: All the Starbucks are pretty much the same in the end. It's not - you don't have any sort of connection to it. You have a connection to a brand, to a style that Starbucks has. If you go to the one on 34th Street, what's the difference between it and 42nd Street? There's no difference - there's no actual real connection. You don't know the people there at all.

SMITH: Harrison believes that maybe the company got bit by karma. In the 1990s, independent coffee houses worried that the proliferation of Starbucks would shut them out. It turns out the new Starbucks were mostly competing with themselves. In the end, the only victim was the Starbucks brand.

Robert Smith, NPR News, New York.

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Starbucks Store Closures To Affect 12,000 Workers

Starbucks Store Closures To Affect 12,000 Workers

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Starbucks will close more than 600 shops in the U.S. in the coming months, which analysts say is a consequence of the chain's spreading too far, too fast.

Seattle-based Starbucks did not say which stores will be closed, only that they are spread throughout the country. But it did say most of the outlets on the chopping block are new Starbucks stores that have been open only since 2006.

In a webcast conference call late Tuesday afternoon, Chief Financial Officer Peter Bocian said the company plans to close nearly 20 percent of these newer outlets.

"We 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," Bocian said.

Many of the stores slated for closure are near other Starbucks stores.

Some analysts had warned about company cannibalism — or stores competing against one another for sales. The culprits behind Starbucks' woes are overexpansion, a weak economy and lots of competition.

Starbucks has been struggling for some time. Its stock price, which closed at $15.62 Tuesday, is half of what it was a year ago.

Earlier this year, the man who essentially made Starbucks, Howard Schultz, returned to the company as the hands-on CEO.

The closures are the latest moves Schultz and the company have taken to try to perk up the company's outlook.

About 12,000 workers, or 7 percent of Starbucks' global work force, will be affected by the closings. The company said it will try to relocate workers to nearby stores.