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Troubled Starbucks ousts its boss and brings back an old hand

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bijou:


--- Quote ---HOWARD SCHULTZ is not trying to pass the buck. Starbucks is in trouble and much of it is self-inflicted. “I’m here to tell you that just as we created this problem, we will fix it,” he promised on Monday January 7th. This coincided with the announcement that Starbucks was bringing back the man who presided over the coffee firm’s rapid expansion in the 1990s. He will retake the helm eight years after he stepped aside as chief executive, replacing Jim Donald, who has run the company for under three years.

The world’s biggest chain of coffee shops is in the midst of its first serious crisis. Last year Starbucks’ shares slumped by 42%, making it one of the worst performers on the NASDAQ stock exchange. In the last quarter of 2007 Starbucks served fewer customers than the year before in America, its biggest market by some distance. When analysts at Bear Stearns, an investment bank, downgraded their verdict on the company last week, its share price plunged by another 12%.

 Not all of Starbucks’ poor performance is of its own making. Prices for food commodities are at an all-time high. This has forced the company to increase prices twice in recent months. But passing on added cost to customers already worried about high food and oil prices, and fearful about a recession in America, has taken its toll. A tightening of purse strings has increasingly encouraged defection to fast-food chains such as Dunkin’ Donuts or Panera Bread. They sell reasonable coffee for as little as a quarter of the price of the fancy Starbucks brew.

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UK is supposedly entering a recession so I imagine discretionary spending will drop here too. Surely the market for Starbucks is just about saturated.

DixieBelle:
I read something interesting the other day re coffee chains.

http://www.slate.com/id/2180301/pagenum/all/#page_start

Basically it says:

The funny thing about Starbucks is it's helped to create a coffee culture filled with a significant number of people who don't actually like Starbucks—which means that, despite conventional wisdom, it's actually a good thing to be a mom & pop coffee shop with a Starbucks nearby, writes Slate. Instead of stealing your business, you get the spillover from their store. "They'll do all of your marketing for you, and your sales will soar."

We've noticed that Starbucks has had another "positive" effect on the coffee house industry—it's trained consumers to willingly pay over $1.50 for a cuppa joe no matter where they're buying it. Maybe this is why "Just over the five-year period from 2000 to 2005... the number of mom and pops grew 40 percent, from 9,800 to nearly 14,000 coffeehouses," and "the failure rate for new coffeehouses is a mere 10 percent."

bijou:
I can understand that. I don't like Starbucks coffee (too burnt) and their cakes and sandwiches are a ridiculous price they do sell nice gingersnap cookies which is the only I ever buy from them.  If I ever want to buy coffee while out I prefer to go to an independent place.

Uhhuh35:

--- Quote from: bijou on January 08, 2008, 10:15:32 AM ---...I don't like Starbucks coffee (too burnt)...If I ever want to buy coffee while out I prefer to go to an independent place.

--- End quote ---
Starbucks serves the same cup of burnt coffee all over the world. I can get exactly the same cup of brewed tree bark in Japan as I can get in my local Pennsylvania store. I can't for the life of me figure out why they ever got popular.

Chris_:
I am not a fan of Starbuck's. But they did have a drive for coffee for the troops at Christmas time. I thought that was good. I have never been in the  military, but I did support them with coffee.

That just sounds lame. I support them in other ways, but I did buy them coffee. I am just going to shut up now, this is not ending well.

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