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2.7%  Q1 GDP    4.57%  avg. 30-year mortgage     9.5%  Unemployment

Starbucks Closing 300 Stores, Laying Off Nearly 7,000

The economic crisis is eating into high-end coffee consumption, as Starbucks found out in its fiscal first quarter.

In earnings just released, the coffeemaker said it would lay off up to 6,000 employees at its stores and let go another 700 non-store employees, half of which would come at the company's Seattle headquarters.

Also, Starbucks said it would close 200 U.S. and 100 foreign stores. This comes in addition to the shuttering of 661 stores announced last year. Most stores are expected close this year.

First-quarter revenue at the coffee giant was down 6 percent and earnings were down a venti-sized 69 percent.

The company also plans to open 140 new stores in the U.S. down from its earlier goal of 200; and 170 new stores internationally, down from 270. Capital expenditures will face a $100 million haircut.

-- Frank Ahrens
The Ticker is Twittering!

By Frank Ahrens  |  January 28, 2009; 4:39 PM ET
Categories:  The Ticker  | Tags: Starbucks, contraction, layoffs, recession  
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The Bush/GOP economic disaster rolls on. Heckuva job, Republicans!

Posted by: hairguy01 | January 28, 2009 4:54 PM | Report abuse

Really this comes as no surprise. Starbucks is almost the ultimate in conspicuous consumption. If you drink coffee, buy it at the supermarket and make it yourself. What the US and its people must realize is:
1. American rampant consumerism is no longer sustainable. The rest of the world can no longer let the US vacuum up the worlds savings to support the mountain of debt this consumerism costs. Neither can the US afford it, and it is highly likely that Starbucks was never affordable in the first place.
2. Economically and environmentally the world's savings are desperately needed to make the investments in the plants, equipment and technology needed to reverse the environmental disaster that faces us and to enable more of the worlds people to afford a few more goods and services.
3. The first Gulf war was paid for/fought out of the Reagon/Keynesian stimulus (spent on military) inventory. The Bush tax cuts and the second Gulf War and occupation have been paid for by maxing out the Visa card, then maxing out the Mastercard and maxing out all the other cards. Don't know if you have anything left on your lines of credit?

Posted by: jerik1 | January 28, 2009 6:57 PM | Report abuse

"The Bush/GOP economic disaster rolls on. Heckuva job, Republicans!"

As far as I know, Dick Cheney was CEO of Halliburton, not SBUX. Please refrain from commenting on anything in the future - on this site or any other.

"The Bush tax cuts and the second Gulf War and occupation have been paid for by maxing out the Visa card, then maxing out the Mastercard and maxing out all the other cards."

Good God. Is Daily Kos? Puffington Host? Total joke.

Posted by: Buffalo66 | January 28, 2009 7:54 PM | Report abuse

"The Bush/GOP economic disaster rolls on. Heckuva job, Republicans!"

As far as I know, Dick Cheney was CEO of Halliburton, not SBUX. Please refrain from commenting on anything in the future - on this site or any other.

"The Bush tax cuts and the second Gulf War and occupation have been paid for by maxing out the Visa card, then maxing out the Mastercard and maxing out all the other cards."

Good God. Is Daily Kos? Puffington Host? Total joke.

Posted by: Buffalo66 | January 28, 2009 7:56 PM | Report abuse

It has been reported that one reason McDonald's profits are up is because people are buying their morning coffee there instead of at Starbucks. About half or less the price.

Posted by: swmdalswmdal | January 28, 2009 9:07 PM | Report abuse

An economy built on casino gambling, cruise ships, overpriced coffee, and just consumerism in general will not long survive. You knew the end was coming when doggie day care was taken seriously as a business plan.

Posted by: brewstercounty | January 28, 2009 9:10 PM | Report abuse

This has been coming on for Starbucks for a long time. Their coffee has been overrated and a poor value. When competition increased and the recession hit, they got spanked.

Posted by: phoaglan1 | January 28, 2009 9:44 PM | Report abuse

Poor value? Coffee at Starbucks is the same as it is at McDonalds. There's more competition, including their own house brands, which are now available at the sandwich shops in many commercial buildings. Nobody is spending less on coffee; it's the ultimate performance-enhancing drug and it's going nowhere. People just aren't going for the dessert drinks as much; and Starbucks owns Seattle's Best too. It's market saturation, and even if everything they did was perfect, someone would want to buy something NOT from Starbucks, if not for the ambiance of a dusty coffee shop with a eclectic singer on a college campus. People are wierd.

Posted by: NovaMike | January 28, 2009 10:00 PM | Report abuse

Starbucks is just one of millions of businesses that were not nationalized by the government. The layoffs are spreading like the plague in the Middle Ages.

Posted by: mharwick | January 28, 2009 10:18 PM | Report abuse

I work in the suburbs. If I walk a mile down one road outside my office I will pass 4 starbucks. One in a mall. One accross the street from the mall. Another accoss another side from the mall in a Bookstore and another a mile down the road.

This has nothing to do with the economy. It is Starbucks building too many shops.

Posted by: atomicfront | January 28, 2009 10:22 PM | Report abuse

Out of work? Thank the Republicans.

Posted by: hairguy01 | January 28, 2009 11:09 PM | Report abuse

so, i wonder where george (w)orthless bush is while this country continues it's spiral into financial misery..

is he in his new TWO MILLION dollar dallas home he purchased at 2% interest popping lays potato chips in his mouth while sprawled out in his overstuffed leather ez-boy lounger pondering just how stupid the american peop;e were during his "watch" over our country when he squandered a federal surplus into a record federal deficit?

bush was, is, and always will be, a friggin butthead.

Posted by: DriveByPoster | January 28, 2009 11:30 PM | Report abuse

Republicans brazenly continue to blame everything on Librul Dimocrats (as they kindly call them), despite the fact that Republicans have ruled the roost for a very long time. It was their "business-friendly" policies that wrecked the economy. And Republicans want it to stay wrecked so that they can claim to have the answer in four years. Borrow and spend. War! Tax cuts. More tax cuts. And yet more tax cuts. But only for the wealthy. Yep. We live in a plutocracy. And a theocracy, too. Starbucks is overbuilt. And people are feeling less silver in their jeans pockets with news of economic collapse on the radio everyday. So, they naturally cut back discretionary spending. Which, any Republican can tell you, is bad for business. Well, at least W. insisted on proper decorum in his Oval Office. I understand the new president works in his shirtsleeves. Horror! (Can't we open a sanitarium for delusional right-wingers? They obviously need intense therapy.)

Posted by: BlueTwo1 | January 29, 2009 12:05 AM | Report abuse

Build a business on the precept that the ever present economic pendulum is going to stop swinging as it has for centuries... either they're stupid, or real smart and don't care because they've already used up their loans, siphoned off the money and will never be held responsible.
The whole economic cycle reminds me of bipolar behavior... they decide they don't care, quit taking their meds and go on a wild manic spending spree. Then the depression sets in, they long for the exciting times and bright lights and the whole cycle starts over. Where's the balance and restraint?

Posted by: TerrifiedAmerican | January 29, 2009 12:08 AM | Report abuse

"...earnings were down a venti-sized 69 percent."


So Starbucks is closing stores and laying off people. I haven't bought their overpriced $5-a-cup coffee in years!

Posted by: gce1356 | January 29, 2009 12:35 AM | Report abuse

The Demise of Starbucks:
(Just one person's observation)

I grew up in/around Seattle in the 80's and 90's when coffee culture first started to catch on. I used to stop at the old Pike St Market Starbucks almost every weekend with friends. Back in the good old days.

I remember thinking about 5 years ago, after having traveled up and down the west coast for a variety of jobs in diferent cities, that Starbucks had lost that community meeting place feel when it quit providing free wi-fi Internet service.

It began as a place you might want to hang out at on a Sunday morning and read the newspaper, meet friends, have a chat with someone you hadn't seen in a while. Coffee was expensive, but it was a nice treat now and then.

Then laptop computers came along and everyone would do homework, office work, email friends or surf the web at Starbucks. It was still a nice place that spent a little extra on customer access to wi-fi because it was a service that could be offset by the high coffee prices.

Then one day the wi-fi was gone. You could still get it, but you had to pay through T-Mobile. That's about the time the Starbucks luster began to wear off for me, when it became just an overpriced, overbranded, overexpanded coffee shop franchise.

Sure, it's made Howard Schultz millions, but it's lost (or sold) its soul.

Howard, if you or any of your execs are reading this you should do your best to get in touch with former customers who were with you from the start whom you've since lost. They might not be sales & marketing whizzes, but they can certainly tell you when and where the sales & marketing whizzes went wrong.

Posted by: gce1356 | January 29, 2009 12:59 AM | Report abuse

I agree with the last poster who said the end began when they started charging for internet access. Just take a look at Panera Bread for proof. They've got great coffee and internet access is free. It feels like Starbucks in the old days. They are doing great business, and as a customer, I feel great loyalty to them. I don't know how I would have gotten through law school without Panera Bread!!

Posted by: curry2lt99 | January 29, 2009 1:14 AM | Report abuse

In addtion to closing quite a number of their oversaturated stores, Starbucks might try:

1. cutting the cost of their coffee; and

2. greatly improving the taste of their horrible bitter-and-burned/scorched, soapy brew.

Posted by: PostToastie | January 29, 2009 2:18 AM | Report abuse

I live in NY but read my hometown Seattle Times daily. Front page today in Seattle: BOEING CUTS 10,000. Chicago Tribune has a small mention of this - but noone else. Everyone else is talking about Starbucks. What is up?

Posted by: mtbunker | January 29, 2009 4:15 AM | Report abuse

The Bush/GOP economic disaster rolls on. Heckuva job, Republicans!

Out of work? Thank the Republicans.

Of course Like their Hero, 'the Little Bushman' , the republicans insist on saying "heckuva job" and "mission accomplished" As if repeating these remarks endlessly will turn IRAQ into a success , or put the Economy on the road to recovery.

Posted by: vze4k4bh | January 29, 2009 5:05 AM | Report abuse

By god, I think we've found the silver lining to the recession: 300 fewer Starbucks. Too bad about the lost jobs, though.

Posted by: goodwinc | January 29, 2009 1:08 PM | Report abuse

I can testify to recently (last 5 months) stopping an extremely expensive Starbucks habit. Both I and my husband have quit drinking their coffee,which we each did several times a week. I still think it's good coffee, but it's obviously horribly overpriced...$4.50 for a mocha double shot? I now make it all at home with a stove-top espresso maker or French press. I love getting back to the basics and spending more time entertaining at home. That, to me, is the bright side of this recession. (I have recently lost my job due to illness, and my husband has never been paid well...he's a chef with few benefits. We have two children. For us this recession has been about seeing upper middle class America experience a reality that is more like our own normal existence--pretty much hand-to-mouth.)

Posted by: Violet6000 | January 30, 2009 10:06 AM | Report abuse

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