NEW YORK—News of Starbucks' plan to close 600 of its 7,000 stores will surely leave coffee addicts with a bad taste in their mouths.
The Seattle-based coffee chain announced yesterday that due to the deteriorating economic environment and increasing competition, almost 9% of all stores in the U.S. were suffering from tumbling profits and thus necessitated their closing. Starbucks projects that its yearly profits will decrease for the first time in eight years, due in part to McDonald's and other stores that targeted Starbuck's consumer base.
Starbucks will cut its stores and jobs by March 2009, cutting almost 8% of its U.S. employees. Starbucks said in a statement that "Details for specific locations are still being finalized… Out of respect and dignity for our partners, and our desire to share this information with impacted partners first, we are not publishing a full list of the stores."
Starbucks management has constantly been evaluating its stores and business model. "Over the last few months, our executive and field leadership teams conducted an extensive review of our business with a goal of enabling our organization to focus its efforts on stores where we can more effectively improve the customer experience."
For the future, Starbucks will "continue to evaluate each store's individual performance under a similar review process, and make operational decisions accordingly."
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