The news that 600 Starbucks stores will be closing soon has been met with much shock and awe. How could such a successful company be met with such hard times? Well, it makes total sense. They expanded way too fast; in some cities, a Starbucks is literally on every corner. Is that really necessary? I think the product should bring people in; not the ultimate convenience. When a new Starbucks opens, it often eats into 25-30% of the sales of a nearby Starbucks. That is no way to operate a business. Company executives must have seen this coming for a long time. You can't sustain such growth patterns. This means that the profit margins of stores decrease while you see a great increase in expenses caused by the rapid expansion. It will be good for the company to go back to the basics, cool down a little bit, and stopping eating itself.
Wednesday, July 02, 2008
Starbucks Eats Itself
The news that 600 Starbucks stores will be closing soon has been met with much shock and awe. How could such a successful company be met with such hard times? Well, it makes total sense. They expanded way too fast; in some cities, a Starbucks is literally on every corner. Is that really necessary? I think the product should bring people in; not the ultimate convenience. When a new Starbucks opens, it often eats into 25-30% of the sales of a nearby Starbucks. That is no way to operate a business. Company executives must have seen this coming for a long time. You can't sustain such growth patterns. This means that the profit margins of stores decrease while you see a great increase in expenses caused by the rapid expansion. It will be good for the company to go back to the basics, cool down a little bit, and stopping eating itself.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment