Now is probably not a good time to be a Starbucks employee in the US. Starbucks are reporting that they are to close 600 of their coffee shops in the US and this will eliminate some 12,000 jobs. Strangely enough the market reacted pretty well to the news and put on as much as 7.2% in Nasdaq trade. The shares eventually closed up 4.7% in after hours Nasdaq trading at USD 16.35.Starbucks had more than doubled in size in the last three years but despite store growth the company had seen declining earnings. Perhaps if there is a case to be made for a company growing too fast then this might be it. Almost 70% of the stores to be closed are less than three years old. However, the company maintains that it is going to stick to its plan of opening another 200 stores through September 2009.
Analysts are suggesting that Starbucks has fallen victim to surging world oil prices where consumers are less likely to spend income on luxuries such as cafe lattes and caramel machiatto.
I was in Starbucks in Plaza Senayan last night and it was doing a roaring trade for a Tuesday evening at 21.00. It was full and more people were lining up to get their gourmet coffee fix. I would be surprised if the franchise holder in Indonesia was looking at consolidating or closing stores, in fact I would be more surprised if an expansion in the number of stores was not being contemplated. However, I am not privy to the financial books and my observations are completely anecdotal based on drinking coffee in various Starbucks stores and them always being full.
Come to think of it, it is time for a coffee!
But it ain't gonna be no Starbucks but rather it is going to be a Kapal Api!
