Coffee's a tough nut: it's not inexpensive to startup or manage a shop, and the margins are sensitive to market conditions (oil prices, milk prices). Two coffee shops opened recently within the two-block walk to my office in Manhattan. Both of them charge more for a large, black coffee than Starbucks does. I don't find either cup better than Starbuck's bold offerings (their Pike's Place, OTOH, I can do without ...)
No. The rationale behind the closings is that the market is too heavily saturated. The two heavy hitters (Starbucks and Dunkin Donuts) have enough presence in major markets to discourage any upstarts outside of your usual neighborhood cafes whose customers don’t frequent the chain stores anyway.
Maybe it will close a gap. If the nation's top coffee retailer is downsizing, it's a sign that the whole industry is suffering at the moment. Starbucks has a chance to hone in on fewer stores and make them all better, instead of just closing all of them for a few hours for a lesson on customer service.
This kind of competition should be at the local level and appeal to the local market. On average a cup of coffee at Starbucks is around $2. The same size cup at McDonald's, who brews Newmans Own Organic is $1. The only way to make a "coffee house" work anymore is to make it unique to your area. Unique to the area's interests and unique in the types of coffee sold. If it were me and I were to open a coffee shop today. I would open one at the corner of Main St and Texas Ave in downtown Houston. I would serve and sell organic coffees and fresh pastries baked on the premises. My hours would be from 5 AM to 1 PM. Everything would be cozy, priced to sell, and easy to determine what you wanted. I would not buy into a predetermined chain that would FedEx me pastries and tell me what my menu would be for the day. Those days have passed.
Yes it opens a gap for possible competition but Starbucks' problem is not competition so even if a gap does open, that should not be their biggest priority.
Everybody knows that it is more expensive to go after new customers than to get current customers to spend more.
what do you think of a flame retardant, water resistant, shock proof, full body suit. A suit composed of organic and synthetic material. The outter body, made up of unicelluar asexual reproductive cells precise for rapid regeneration. adaptable to both body temperature and climate (original primary function). A type of material that can recognize human contact on a contious level (not just sensitive to body heat) and could bond with that specifc person. the original suit idea was not intended for combat purposes but as an alternative to excess clothing in the winter, and heat exhaustion. dont get me wrong there would be styles enfluenced by fation companies but i still think it's a work in progress. oh and i apoligize for not talking about the topic. I'm all ways opten to feed back!
Of course it will. The only question is whether or not the people to take advantage of these gaps are small locals or other chains. I'd put my money on the locals. If Starbucks can't make their margins in these places, it's not likely another chain will dive into deep water over these.
Actually, it was in response to low cost, higher quality competition (McDonalds, Dunkin Donuts, 7-Eleven),brand dilution, and gross overexpansion that Starbucks is scaling back. The gap IS & HAS BEEN open and it is as wide as the Grand Canyon.
I doubt it. There were too many SBs anyway so setting up a competitor shop wouldn't be that profitable. The economic slump means less $3 a cup coffee drinkers but this is temporary and then SB will be back.
It would seem that any competition would have to have the twist that Dan and Chip Heath mention in their article. Everybody is doing coffee opening it for anybody to do coffee.
i hope so. my homestate had a coffee company named john conti who had the best brew! starbucks came along and was just like wal-mart.
i preferred conti. their capiccino, latte, and coffee was moderately priced. starbucks was way too expensive. bring back john conti. it was locally owned and operated
starbucks' evolution into a corporate entity has opened gaps for competition.
i would rather drink my coffee (note not a decaf moca latte grande pooty tooty) at a place you've never heard of because it only has one location down my street than at starbucks, and a lot of people who want a coffee shop would too.
six hundred stores closing will just be the scaling back of what has been obviously over inflated for a while.
Closing 600 stores is only one of the ways where there could be a gap created for competition.
The Starbucks brand was built on selling you an experience, not just a coffee. Starbucks growth has made it difficult in some markets to retain top talent and training the new recruits on the experiential side of the business takes time.
People will pay five bucks for a coffee when the Sbux rep remembers their order, smiles, jokes and even knows their name.
The Sbux team members are the real commodity and when turnover makes it so you do not recognize any familiar faces at your local Sbux the real reason you spent the money is gone.
21 Total
July 8, 2008 at 9:03am by Steve McNally
Coffee's a tough nut: it's not inexpensive to startup or manage a shop, and the margins are sensitive to market conditions (oil prices, milk prices). Two coffee shops opened recently within the two-block walk to my office in Manhattan. Both of them charge more for a large, black coffee than Starbucks does. I don't find either cup better than Starbuck's bold offerings (their Pike's Place, OTOH, I can do without ...)
July 8, 2008 at 9:09am by Chase Wegmann
No. The rationale behind the closings is that the market is too heavily saturated. The two heavy hitters (Starbucks and Dunkin Donuts) have enough presence in major markets to discourage any upstarts outside of your usual neighborhood cafes whose customers don’t frequent the chain stores anyway.
July 8, 2008 at 9:15am by Rachel King
Maybe it will close a gap. If the nation's top coffee retailer is downsizing, it's a sign that the whole industry is suffering at the moment. Starbucks has a chance to hone in on fewer stores and make them all better, instead of just closing all of them for a few hours for a lesson on customer service.
July 8, 2008 at 11:08am by Megan DaGata
This kind of competition should be at the local level and appeal to the local market. On average a cup of coffee at Starbucks is around $2. The same size cup at McDonald's, who brews Newmans Own Organic is $1. The only way to make a "coffee house" work anymore is to make it unique to your area. Unique to the area's interests and unique in the types of coffee sold. If it were me and I were to open a coffee shop today. I would open one at the corner of Main St and Texas Ave in downtown Houston. I would serve and sell organic coffees and fresh pastries baked on the premises. My hours would be from 5 AM to 1 PM. Everything would be cozy, priced to sell, and easy to determine what you wanted. I would not buy into a predetermined chain that would FedEx me pastries and tell me what my menu would be for the day. Those days have passed.
July 8, 2008 at 11:22am by Ray Myers
No. It'll shut down the unproductive stores and help competitors sell more coffee. The market is saturated.
July 8, 2008 at 11:45am by David Mullings
Yes it opens a gap for possible competition but Starbucks' problem is not competition so even if a gap does open, that should not be their biggest priority.
Everybody knows that it is more expensive to go after new customers than to get current customers to spend more.
July 8, 2008 at 12:36pm by Carel Two-Eagle
Probably, given that nature abhors a vacuum.. and they already have substantial competition..
July 8, 2008 at 1:26pm by Ayodele Goldsmith
what do you think of a flame retardant, water resistant, shock proof, full body suit. A suit composed of organic and synthetic material. The outter body, made up of unicelluar asexual reproductive cells precise for rapid regeneration. adaptable to both body temperature and climate (original primary function). A type of material that can recognize human contact on a contious level (not just sensitive to body heat) and could bond with that specifc person. the original suit idea was not intended for combat purposes but as an alternative to excess clothing in the winter, and heat exhaustion. dont get me wrong there would be styles enfluenced by fation companies but i still think it's a work in progress. oh and i apoligize for not talking about the topic. I'm all ways opten to feed back!
July 8, 2008 at 1:31pm by Shakiara Kitchen
There's opportunity for new and existing independent coffee shops to evolve into accelerated social hubs, not just spots for working on your laptops.
July 8, 2008 at 2:55pm by Dorn Lynch
Of course it will. The only question is whether or not the people to take advantage of these gaps are small locals or other chains. I'd put my money on the locals. If Starbucks can't make their margins in these places, it's not likely another chain will dive into deep water over these.
July 8, 2008 at 3:42pm by Saabira Chaudhuri
I agree with Chase - well said.
July 8, 2008 at 4:04pm by Padraic O'Gawain
Actually, it was in response to low cost, higher quality competition (McDonalds, Dunkin Donuts, 7-Eleven),brand dilution, and gross overexpansion that Starbucks is scaling back. The gap IS & HAS BEEN open and it is as wide as the Grand Canyon.
July 8, 2008 at 5:33pm by Lance Shields
I doubt it. There were too many SBs anyway so setting up a competitor shop wouldn't be that profitable. The economic slump means less $3 a cup coffee drinkers but this is temporary and then SB will be back.
July 8, 2008 at 9:58pm by Delphia Simmons
It would seem that any competition would have to have the twist that Dan and Chip Heath mention in their article. Everybody is doing coffee opening it for anybody to do coffee.
July 9, 2008 at 1:03am by Kelly Brent
nope. it will just create longer lines at the Starbucks that are still open. Even that means longer walks in my high heels.
July 9, 2008 at 1:07am by Denise Groves
i hope so. my homestate had a coffee company named john conti who had the best brew! starbucks came along and was just like wal-mart.
i preferred conti. their capiccino, latte, and coffee was moderately priced. starbucks was way too expensive. bring back john conti. it was locally owned and operated
July 9, 2008 at 4:12am by jacob starkey
starbucks' evolution into a corporate entity has opened gaps for competition.
i would rather drink my coffee (note not a decaf moca latte grande pooty tooty) at a place you've never heard of because it only has one location down my street than at starbucks, and a lot of people who want a coffee shop would too.
six hundred stores closing will just be the scaling back of what has been obviously over inflated for a while.
July 9, 2008 at 4:14am by CHAD KIKUTA
It will create a temporary gap i believe, possibly encouraging new businesses to open. in the end convenience will be the common denominator.
July 9, 2008 at 4:35am by jacob starkey
actually, i'm with the flame retardant suit guy.
screw starbucks and dunkin donuts (although i think the first guy who mentioned dd deserves a high five.)
July 10, 2008 at 12:37am by Adam Barton
Starbucks would make more money if they offered one hour of free wireless internet to paying clients.
July 19, 2008 at 5:49pm by Lisa Larter
Closing 600 stores is only one of the ways where there could be a gap created for competition.
The Starbucks brand was built on selling you an experience, not just a coffee. Starbucks growth has made it difficult in some markets to retain top talent and training the new recruits on the experiential side of the business takes time.
People will pay five bucks for a coffee when the Sbux rep remembers their order, smiles, jokes and even knows their name.
The Sbux team members are the real commodity and when turnover makes it so you do not recognize any familiar faces at your local Sbux the real reason you spent the money is gone.