Starbucks Cuts U.S. Growth Plans
Submitted by
CalculatedRisk on Wed, 04/30/2008 - 2:42pm (44 comments)
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this just in (my stomach)...their caramel brownies aren't that good
I heard a guy on the radio today say the U.S. has 19.5 square feet of retail per person.
He said he had studied the situation in-depth and concluded that the U.S. actually needs 10 square feet of retail per person.
So, roughly half the retail space in the U.S. is surplus.
The moderator asked what would become of all the excess space.
Oh, he said cheerfully, that's no problem. There's lots of things they do with it. They can use it for hospitals, schools, shelters, hotels, offices, or factories.
So, you see, we actually may not need much new commercial space at all for awhile. Assuming he's right.
What's that sound? I think its the collective scream of strip mall developers around the country. "NOOOOOOOOOOOOOO!!!!!!!"
I am sure 90% of them have starbucks somehow in their business plan.
On a related note: Maybe starbucks should follow the lead of many luxury good retailers and start some outlet centers. Call it "LesBucks". We could drive for miles to their out of the way location to save up to 45% on our mocha. On second thought, maybe that won't work.
SRS action over the last few days supports that.
Starbucks was a trend (or a fad) in two ways.
The first way was by creating welcoming community spaces where people could hang out often and for a long time, basically plugging the meter by buying low-cost, high-price/value items. The profit margins on coffee are about 80%. It's the most profitable thing a restaurant sells.
The second way was by convincing Wall Street that they could multiply units and saturate metro areas without cannabalizing their own stores.
Now, both trends have hit the wall at the same time. They couldn't keep running fast enough to live up to their own fable. They are way over-stored in many areas, including Manhattan.
Boston Properties and GGP both reported almost 50% cuts in earnings last coupla days.
"The family kept up with its payments until a personal tragedy hit. Robin's sister died unexpectedly, prompting Robin to take a few weeks of unplanned leave from her job. They got behind with their bills"
From the thread below, I really don't intend to be hard hearted, but people really make stupid financial decisions. I've seen quite a few and made some of my own. Tragic as the untimely death of a sister may be, if you take a few weeks off work and wreck the household finance I don't have a lot of sympathy.
Well, maybe that vacant Der Weinerschnitzel that Starbucks bought in my town a couple of years ago -- and since has let sit -- will be on the market again soon.
Them Starbuckeroos ain't no dummies. They know where all the money went.
Supernova-bux.
Heh,
I keep flashing on the scene from Shrek 2 when the giant gingerbread man flushes the screaming crowd of people from a Starbucks...into the Starbucks across the street.
Art, life and all that.
Expand overseas? Really? I'm not sure their timing is quite right.
I don't have a lot of sympathy.
Don't sweat it. I'm sure no one will take any time off when you die.
Eh, I didn't really want one in my backyard anyway.
Damn, I guess they're going to cancel that lease for my basement now.
There goes plan B for the MLMdome if financial armageddon doesn't occur after all.
Expand overseas? Really? Has anyone seen the cost of coffee with our strong a$$ dollar. Great move Mgmt.
CL writes:
Expand overseas? Really? Has anyone seen the cost of coffee with our strong a$$ dollar. Great move Mgmt.
CL | 04.30.08 - 8:56 pm | #
Last I knew they didn't grow coffee in the US - oh except for a little on Kona, my bad - so why would the dollar be a problem? They would staff up in host country... buy ingredients & pay labor in the host country currency and sell to locals in the host country currency & book the profit in the host country currency - and repatriate only as much USD as is prudent or required under tax law (both for the host country & US).
Not a biggie IF their product translates well into that host countries economy.
dryfly
You beat me to it. The couple's stupidity was limited to their real estate transactions. Anybody who thinks it's stupid to take a few weeks off when a sibling dies has a highest, best use as meat.
do we really need a Starbucks store in the same strip mall as a grocery store with a Starbucks kiosk?
I see this so often it's just like the Lewis Black routine about the S'bux across the street from another S'bux.
oh, I was recently at Terminal 4 at Sky Harbor airport in Phoenix. There are actually two Starbucks on the same food court level, about a football field apart from one another.
Starbucks over processed their brand--it lost it's cache with the oooosoocool 30 somethings in my office. Now days these guys are going instead to McDonalds and bragging about how they saved a couple of bucks.
excellent, now lets hope dunkin donuts stops building their stores on every corner as well
I was recently in Vancouver where there are two Starbucks on opposite corners of the same intersection.
Not sure if Canada qualifies as "overseas" but if they keep things up at the same rate there will be starbucks on all four corners soon.
frozen yogurt (80's), video rental stores(90's), coffee shops(00's). Soup kitchens(10's)?
Starbucks over processed their brand--it lost it's cache with the oooosoocool 30 somethings in my office. Now days these guys are going instead to McDonalds and bragging about how they saved a couple of bucks.
Not the ohsocool 30 somethings I know - they all grew up with MCDonalds coffee... and Holiday Store coffee... and Kwik Trip coffee... and Love's Truck Stop coffee. Every kid from fly-over knows them well - they were the luxury coffee (the cheap stuff you brewed at home & put in a skanky 10 year old thermos you took with you.... I get the coffee shakes just thinking back about that stuff).
And if the coffees been sitting a long time (and when hasn't it been sitting around when they brew the stuff up in recycled 55 gal drums) if does resemble 'expresso' after awhile... in the same way white latex paint resembles cream.
BTW - I drink GALLONS of McD coffee on the road - have for 30 years. There ain't no magic there for them that's already been there.
The best thing about Terminal 4 is the Oaxaca burrito stand. The worst thing is how they hide the security screening line so you can't guage how much time you have to get lunch before getting in line.
The Oaxaca restaurant on West Roosevelt is also pretty good.
[RANT MODE=ON, FONT=LARGE]
well i can tell you one thing about US brands in eastern europe. for example mcdonalds, their pricing was twice the price in the US even before east european currencies started to appreciate like mad. so you can imagine how much they earn here. the same counts for austrian banks. EE is eldorado for foreign companies. if i were to translate their pricing to english or german and send it to the regulators in western countries these companies would be immediatly crushed by consumer advocates if they tried to pull something like that in the west
anyway about the dead sister, sry i also have no mercy for that, maybe cause i am too conservative to make repeatedly stupid decisions or bring myself into situations where i would jump on every stupid advertisement that say that i must have an 801k with 1000% appreciation xD
if i know i dont have the savings i dont take several weeks of unpaid leave. but thats only me a moron who thinks people should be responsible, from who the state takes 45% of his income and through sales tax another 10% so yes not much has changed from the Feudal times where people paid 50% to state and 10% to church, now we have it so much better, we pay only 55% of our income to state
sorry that i am not so much in the free luncho mode these days like some of you evidently are, since just few months ago gypsies in nearby town got brand new homes for free because they are gypsies, paid for by the EU taxpayers. not that they wont dissasemble those houses for scrapmetals, sell everything they can, burn it down and then go to town council "give us new housing we are poor, the houses have "outlived" themselfs". and that was a citation
this is not racismus this is dejavu, its what repeates again and again every 3 years.
gypsies get housing, they destroyit, morons from EU come tell us how we are responsible for them, then EU pays to build again only for these houses to be disassembled and burned down, but hey we are social.
and then when we are lucky we even get to LATIMES editorial how the poor gypsies have to live in disassembled and burned down houses. Hoocoodanode?
btw. i have several gypsie friends who work, but somehow these guys dont get free housing, cause THEY WORK ...
so yes if her syster died, ok take a week free if you can ALLOW it yourself but not if your on a tight budget
[/RANT]
Big 5 Sporting Goods Corp., a sporting-equipment retailer, said Wednesday its first-quarter profit fell 46 percent amid a difficult retail environment.
One year in a San Francisco nursing home now costs an average $100,101, the survey said. A comparable private room costs $92,740 in Oakland, $92,094 in Sacramento, $89,973 in San Jose and just $76,459 in Los Angeles. In less urbanized parts of California, the statewide average is $72,919 annually, which is less than the U.S. average.
This reminds me of walmart retardation, i.e, to build non-stop stores and to be everywhere they are not at now. We need more back-to-back walmarts with higher gas and food prices so that they can report higher sales and continue expansion!! Walmart and Bernanke share The American Dream of Positive Inflation and growth at any cost....support them, embrace them, give your cash to China!!
Cutting expansion plans won't help the fact that their coffee sucks.
Except as a leather tanning agent.
I was in Kiev last week; the place is becoming wall to wall with coffee houses, though as far as I can see they're mostly indigenous (called Coffee House and Coffee Time, transliterated into Ukrainian) ... it's possible they're international brands concealing their names, but that would sound unlikely.
Ukraine is an order of magnitude poorer than the US, but you couldn't tell from the prices in the coffee houses; there was one branch of an Australian chain which I went to with an Aussie expat friend, and he said the prices were slightly higher than in Melbourne.
I've seen a number of headlines about businesses expanding operations. Be careful cherry-picking headlines like this CR, calling BFI trends is much harder than RI.
Gonna be some mighty grumpy yuppie crack addicts....
Heh. The NYC affiliate of Fox sent a reporter out in the streets. Apparently, it's impossible to find a corner where you can't see a Starbucks from any other Starbucks in Manhattan.
Starbucks expanding overseas? Sure, why not, everybody else is.
They might be able to sell their horrible coffee to people in Asia, but I seriously doubt that anyone in Europe would be willing to buy let alone drink their overpriced, horrible swill. The thing about Europe is that they invented high end fancy coffee, and it's 1.5 million times better than ANYTHING in Starbucks.
So while they are trying to expand, they need to completely redo their entire product line.
I can't believe nodoby in the thread has yet mentioned this chestnut: New Starbucks Opens in Rest Room of Existing Starbucks
Actually the Starbucks in Paris was very busy.
Starbucks is going to roll out kiosks in the bathroom of Stasrbucks so you don't need to waste anytime.
About time they took a fall.
First they killed Valencia syrup, then they kill Orange syrup.
I'd put a horsehead on their pillow if I could.
And then they killed Almond Syrup. What the hell?
I pretty much stopped the SBUX fix around October of last year. It made absolutely no sense to pay $4 for a latte when my company offers some excellent single-cup brew for free. Now I just bring my own Carnation creamer to add some flavor, and I'm perfectly fine with that.
It also didn't help that Starbucks' quality went straight into the toilet. They began skimping on syrup and loading 1/3 of the cup with foam. Ridiculous for the price.
I'm shedding no tears for Starbucks. If they went totally out of business, that would be fine with me.
"so yes if her syster died, ok take a week free if you can ALLOW it yourself but not if your on a tight budget
[/RANT]
revro"
Here's what you don't seem to recognize: when someone in a family sickens with a potentially fatal condition, the cost to the family is not merely funeral and/or mourning. Health care providers from within the family make huge personal sacrifices of both time and money in the months and years prior to a death.
Or, they realized that opening a starbucks across from a starbucks was just counterproductive at this point.
I agree 110% that S'bux coffee is CRAP and that is why they load most of their coffee drinks with sugar and cream and flavors so that it's more like a sundae than coffee.
Drink their espresso or cappuccino, if you know what the real thing is supposed to taste like. That will tell you how utterly crapola their 'coffee' is.
I live in Phx also, albrt. I agree very, very much about Oaxaca, in both locations. The Oaxaca by the state capitol used to be a popular hangout with the politicians and lobbyists, not sure if it still is any longer.
las, that sister died surprisingly. but your right on the long term impact part.
altough the problem here is that most people run around like smiling brainfree bimbos one paycheck away from BK. i mean people have ZERO savings, throw money out of window for stupid things they dont need and cry how poor they are.