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What’s Brewing at Starbucks? A Common Problem or Sign of the Times?

Starbucks has reported profits were down 97%.   That is a steep decline.   Starbucks has enen restructuring, closing locations and laying off employees.   Think of all those baristas out there looking for work.   All those questions about how you want your coffee, and no one to answer.

Starbucks is a story of the economic meltdown.   But it is also a story of something that has been overdone.   It was inevitable to me that Starbucks to a certain degree would go the way of all those bagel shops, Noah’s to name one of many, who overextended and then discovered people would soon get tired of a bagels every day.   Three bagel shops on every corner was proving to be a bit too much.

Then there were the doughnuts.  People lined up for days for Krispy Kreme.   Then came more locations and even franchises where you could buy Krispy Kreme doughnuts only not hot and not as fresh.   Trouble came to Krispy Kreme.   Soon the yogurt shops will follow suit.  Nine million yogurts, which, like coffee, spells out cheap rewards for the world weary.   But up to a point.   With the trouble in the economy and a dozen other things going wrong, the same-same in yogurt will soon cause the closing of dozens of yogurt shops.

So is Starbucks decline totally a sign of the times or at least partially an indicator that people got tired of the same bland, but uniform decor was positioned on every corner so it could offer what tastes like burnt coffee at premium prices to an often fickle public.  Starbucks must have sensed the change themselves.   In response, they offered just plain coffee.  Coffee on the cheap.  Coffee on the cheap for Starbucks is an admission that business is not going swimmingly.

Enter MacDonald s with its premium coffee and Dunkin’ Doughnuts with the same, and suddenly standing in the long lines and being forced to answer all those questions about how you want your coffee drink is not quite as appealing as it once was.   So now people can buy premium coffee at a cheaper price and maybe have enough left over to actually buy some food with that.

Food is good.  My grandfather used to tell me that during the last depression, if you had food it was a sign you were doing well.   Coffee, he said, you could get for nothing.

So now you have these baristas who are out of work and trained at least to offer service.  Ersatz service, perhaps, but a modicum of service,nevertheless.

By Gordon Basichis

Gordon Basichis is the Co-Founder of Corra Group, specializing in pre-employment background checks and corporate research. He has been a marketing and media executive and has worked in the entertainment industry, the financial, health care and technology sectors. He is the author of the best selling Beautiful Bad Girl, The Vicki Morgan Story, a non-fiction novel that helped define exotic sexuality in the late twentieth century. He is the author of the Constant Travellers and has recently completed a new book, The Guys Who Spied for China, dealing with Chinese Espionage in the United States. He has been a journalist for several newspapers and is a screenwriter and producer.

One reply on “What’s Brewing at Starbucks? A Common Problem or Sign of the Times?”

You barely scratched the surface for this, and so unfortunately your post here only reveals the superficial and suggests artificial truths. Starbucks has been blaming the woe-is-me economy for their terrible performance for months now, and people like you buy it up as something *external* rather than internal to the company.

Problem is that competitors slinging $4 lattes like Peet’s are posting quarter over quarter profit growth at the same time:
http://www.worldteanews.com/index.php/20081031328/Business-/-Financial/Peet-s-Keeps-Up-Growth.html

All of which underscores that something stinks *inside* Starbucks. Even if there are plenty of lemmings who will buy their story that all their troubles are external.

Starbucks is NOT the story of the economic meltdown — though they clearly want you to believe that. Starbucks is also not the story of something overdone, as their competitors’ profit growth this year attests.

Starbucks is the story of something that commodified itself for mass-market, fast-food-level production, lost their way on quality in the automated process of doing so, and now is doing their darndest to convince people like you that it’s just external factors — not internal ones.

It’s always easier to blame someone or something else for your problems before you blame yourself. Unfortunately, your post here just helps their paper-thin argument. You obviously bought their story hook, line, and sinker.