Seattlest: Is Starbucks In Its Death Spiral?

TroyJMorris

Fri, 01 Aug 2008 17:46:31 -0800

They expanded so quickly to raise stock prices. During a recession, expansion doesn't affect stocks, as investors are more cautious and do what they should have always done - research.

swag

Fri, 01 Aug 2008 14:20:18 -0800

It's official. Schultz can no longer blame gas prices or the economy. Last night competitor (and, some might say, original mentor) Peet's Coffee & Tea posted a 69-percent rise in profits in the second quarter: http://www.forbes.com/feeds/ap/2008/08/01/ap5280510.html Time to start swallowing some bitter medicine and stop blaming others and external forces.

Charles Redell

Thu, 31 Jul 2008 14:36:51 -0800

Ditto Jeremy. As I've said before, things may look bad for big Green, but this is just a phase. They may not be the best place in Seattle to get coffee, but in many places, they are and that's saying something. Long term, these guys are a hold for sure.

Jeremy M. Barker

Thu, 31 Jul 2008 09:56:55 -0800

Definitely no death-spiral involved here, sorry to say. Starbucks's greatest achievement has been penetrating espresso into mainstream American culture. Even ten years ago, their was still a "snootiness" associated with espresso. I remember working as a sheet metal worker during the summer before my freshman year of college, and the under-35 workers would come in with espresso and the over-35s would mock them. Now, as the McDonald's espresso ads make clear, it's the place, not the coffee, that's pretentious. So one way or another, Starbucks will successfully re-brand itself as a chain store provider of a mediocre good, a new Dunkin' Donuts or the like. That's not a death spiral, that's a metamorphosis, like a butterfly emerging from a cocoon, except the beginning wasn't really all that cute, and what's coming out isn't exactly pretty either.

bigyaz

Thu, 31 Jul 2008 09:10:48 -0800

Starbucks obviously xpanded way too fast and too far, and now its paying for it. But that's not unusual in the business world. So then they have to dump their non-profitable stores (or divisions, or whatever), reduce staff and move on. I think calling it a death spiral is way overblown. Go to any big city (and their suburbs) and you'll see scores of Starbucks stores doing a booming business. If management learns from this I expect the company will do just fine.

brad

Thu, 31 Jul 2008 06:35:19 -0800

True dat. All of it.