"Starbucks Mass Store Closings Have
Begun And It's Worse Than You Think"
by Epic Economist
"Things aren’t looking good for the biggest coffee chain in the world. Starbucks is closing hundreds of stores right now, and there are many reasons behind this decision. Some store formats are simply not working anymore. In addition, several locations have been reporting poor financial results for years, franchisees are going bankrupt, and experts say rising labor tensions and leadership uncertainty are making the company’s stock a bad investment right now. The coffeehouse chain is actually shuttering all stores in one U.S. city due to a combination of all of these problems. As it turns out, Starbucks’ issues are much more complicated than people imagine, and even CEO Howard Schultz is saying that the company “has lost its way”. It is clear that something is deeply wrong with the coffee retailer’s business in 2023, and today, we investigate which factors are threatening to push Starbucks over the edge in the months ahead.
This summer, your local Starbucks may disappear. According to a report released by the Seattle Times, roughly 20 Starbucks stores are being closed in the state due to rising theft, safety problems, and declining foot traffic. That comes after the company shuttered about the same number of locations in the state just a year ago citing similar concerns.
The outlet also identified dozens of closings across 6 states spurred by declining sales and persistent underperformance. Amongst them are four stores in the surroundings of Universal Studios, in Florida. A dozen shops in Nashville, Tennessee, and six closings in Chattanooga, Tennessee, as well as an unspecified number of closings in Louisville and Bowling Green, Kentucky, a spokesperson said. On top of that, the company also decided to close all of its stores in Ithaca, New York. Executives cited worsening financial conditions and unprofitability, but some allege that the closures were tied to the stores' attempts to unionize, according to Insider.
Other locations are going dark because franchise operators have gone bankrupt. That’s the case of Starbucks shops in Aspen, Colorado, and Philadelphia, Pennsylvania. Due to “issues of nonpayment” of millions of dollars in fees, Starbucks sued Manhattan Capital, which then filed for Chapter 11 bankruptcy noting that it was incapable to pay the debt due to a lack of cash flow. As a result, all Starbucks stores operated by Manhattan Capital are in the process of closing down permanently.
When it comes to brick-and-mortar retail stores, Starbucks has already shuttered 150 locations in the United States this year. "We are beginning to close stores," interim CEO Howard Schultz said in a video posted to Twitter. "This is just the beginning. There are going to be many more." Over the past 12 months, Starbucks closed 424 U.S. company-operated stores or about 5% of its total. Today, there are roughly 9,000 company-operated Starbucks stores in the country, down from 11,300 in 2020.
Over the past two years, the company is coping with a $3.2 billion loss in sales due to the pandemic, inflation, supply chain issues, and shortages of key ingredients and materials. That’s an alarming figure considering that the company’s most recent balance sheet released on February 2, 2023, showed total debt is at $14.93 billion. That's the reality of a company rotting from the inside, and the saddest part is that the biggest losers of this narrative will be U.S. consumers, who will end up losing their beloved coffee spots due to a severe case of mismanagement and lack of respect with its employees and the public."
Video and comments here:
No mention of customers tired of dealing with druggies in the bathrooms, of course.
ReplyDeleteAnd our 15 year old stove top espresso pot is still working beautifully for basically the cost of just ground coffee. No loss to humanity as they vanish.
ReplyDelete... and the woke employees who treat you poorly.
ReplyDelete