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Starbucks to Close More Stores
By JANET ADAMY
July 1, 2008 5:29 p.m.
In its most significant pullback yet to its U.S. expansion, Starbucks Corp. said it will close an additional 500 U.S. stores and cut 7% of its work force.
The move effectively ends Starbucks' era as a break-neck growth company, one that blanketed the country with about 11,000 locations nationwide since the late 1980s. It's also a sign that the specialty coffee business is taking a troubling turn just as mainstream companies like McDonald's Corp. are beginning to invest heavily in it.
Starbucks said the 500 locations, as well as 100 others it slated for closure earlier this year, will shut down during the remainder of this year and the early part of next year. The company said as many as 12,000 full-time and part-time retail positions will be eliminated with the store closures.
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06/12/08
• Starbucks Slows U.S. Growth Plans
05/01/08The Seattle coffee giant did not give details on where the stores are but said they are spread across all major U.S. markets and that about 70% of them have opened since the fall of 2005. Starbucks is closing locations that are either not profitable now or are not projected to provide acceptable returns on the investment in the future, the company said.
Throughout this decade, Starbucks opened hundreds of locations across the country to boost sales growth and siphon traffic from stores where long lines were driving away customers. The density of Starbucks in places like New York and other large cities turned the chain into a ubiquitous American symbol, spawning countless jokes about the chain's prevalence.
But last year, as Starbucks sales began to soften, it became clear that the company's growth was cannibalizing its sales in a way that was threatening the chain's success, as well as causing the quality at existing locations to slip. Analysts have said that Starbucks lowered the bar on selecting new locations in recent years.
"We recognize that it is necessary to make decisions that will strengthen the U.S. store portfolio," Starbucks Chief Executive Howard Schultz said in a statement.
Starbucks has been struggling to lure customers amid a slowdown in consumer spending and increasing competition from other coffee and restaurant chains. Mr. Schultz took over in January to revive the company, whose stock lost about half its value in the year before his return, but the company's shares have yet to rebound. He has been speeding through changes, including introducing a new daily brewed coffee that has helped boost Starbucks' drip coffee sales but has alienated a small group of loyal Starbucks customers.
The store closures are likely to please Wall Street, which has called for more store shutdowns and swifter spending cuts. Next fiscal year, the company plans to open fewer than 200 company-owned locations in the U.S., down from its earlier forecast of 250 locations. Starbucks has said that it is shifting some of that growth overseas, where markets are more promising.
Write to Janet Adamy at janet.adamy@wsj.com
RELATED ARTICLES FROM ACROSS THE WEB
Related Web News
• Starbucks pulling plug on 600 U.S. stores Jul. 01, 2008 marketwatch.com
• Starbucks closing 600 stores in the US Jul. 01, 2008 npr.org
• Starbucks to cut as many as 12,000 positions Jul. 01, 2008 news.yahoo.com
• Starbucks to close 600 U.S. stores Jul. 01, 2008 nbc.com
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Edit: I just deleted the dead space.
Agree that 11E is far nicer than the Landing...I wasn't aware they had such a good deal on the rent :D..that might be a game changer
Quote from: stephendare on July 01, 2008, 05:51:40 PM
My guess is the one with free rent will stay.
11 east.
Or at least I really hope so.
The space is awesome and the staff ties with San Marco as the best in the city
i think the best is St Aug Rd & San Jose Blvd intersection (also the most volume in the city). 2nd is a tie between Hodges/JTB and Roosevelt Mall on 17.
The 11E location is awesome. Hope it stays!
Hmm - I'd bet that the Town Center locations get thinned out and/or the airport.
Well, its official Downtown is losing the Starbuks at 11E.....another step backward for a struggling Downtown.
http://www.jacksonville.com/tu-online/stories/071808/bus_305670782.shtml
Sad that the 11E location is closing. Funny how Starbucks is closing their location inside the OP Mall and the location outside the OP Mall as well.
G-d it. I mean, I thought it was lunacy that they would open a store when the Landing one is three blocks away, but the 11E is SO much nicer and easier to get to than the Landing. Wonder why they close 11E vs Landing? Cheaper rent? Harder-to-back-out lease?
More than likely its a couple of white collars on the 50th floor with a big conference table and a map fingering out random locations... :)
I wonder if anybody at City Hall cares?
Sounds like this closing is a bad decision. Surprisingly, only one Starbucks is getting the axe up here in SC...it's located in Spartanburg.
Actually, I just had an idea. Somebody needs to contact Dunkin Donuts, Starbucks' main competitor, and see if they would consider moving in. The franchise is undergoing a pretty substantial expansion, and it wants to create more stores with a cafe look and feel, much like Starbucks. This might be a perfect fit, and give DD an opportunity to take away from its competitor. Can any of you MetroJax guys look into this?
A Dunkin Donuts wouldn't be a bad idea. There used to be one Downtown at the corner of Forsyth and Julia (i believe) its been closed a several years now.
Caribou Coffee is another option. Looks like they're interested in expanding into Florida. One downside may be the long-term health of the parent corporation.
http://caribou.simplicis.net/page/1/step2.jsp?dma=Florida&state=true (http://caribou.simplicis.net/page/1/step2.jsp?dma=Florida&state=true)
Caribou Coffee's parent company is indeed struggling, but DD should definitely consider this store, especially after what fsujax just posted. If DD had a store location in downtown before, they might want to consider putting their presence there again, albeit would be further from downtown.
11E- OUT.
The Landing - Safe.
http://www.jacksonville.com/tu-online/stories/071808/bus_305670782.shtml
Starbucks will close six First Coast stores as part of a previously announced nationwide purge aimed at weeding out unprofitable locations.
The company released on Thursday the list of 600 stores to be closed.
Official closing dates have not been set. The company announced this month it would begin the closings in July, continuing through the first half of the next fiscal year.
The stores being closed:
- Downtown Jacksonville at 11 E. Forsyth St.
- 8060 Phillips Highway near Baymeadows in the B.J.s Wholesale Club and Lowe's shopping center.
- County Road 210 and Nature Walk in the Johns Creek shopping center.
- 1910 Wells Road inside the Orange Park Mall.
- 1907 Wells Road across from the mall near Target.
- 410 Blanding Blvd. near Kingsley in the Pine Tree Plaza shopping center.
How many Starbucks locations will Jax have left after this?
I can't believe all four SJTC stores made it.
Quote from: Steve on July 18, 2008, 12:02:42 PM
I can't believe all four SJTC stores made it.
They are actually building another one.
Yet another blow to the "revival" of Downtown Jacksonville.. What a joke.
Quote from: copperfiend on July 18, 2008, 12:17:52 PM
Quote from: Steve on July 18, 2008, 12:02:42 PM
I can't believe all four SJTC stores made it.
They are actually building another one.
Are there 4? The only ones that come to mind is the one by Publix and the one by Maggiano's.
Quote from: Charleston native on July 18, 2008, 11:58:12 AM
How many Starbucks locations will Jax have left after this?
That still leaves around 300.
Quote from: DetroitInJAX on July 18, 2008, 03:12:41 PM
Yet another blow to the "revival" of Downtown Jacksonville.. What a joke.
It sucks, to be sure, but I think this is an opportunity for a locally-owned and operated business, or at least a franchise with local ownership, to go in there. Whomever does may actually even pay rent on the space, meaning dollars spent in or by whatever business springs up may actually stay in Jax, rather than going to Seattle.
Don't get me wrong, I enjoy Starbucks, but they're still ubiquitous. Hopefully something both necessary and unique can fill the void.
I don't think it will sit empty long. That space is ideal for a local coffee shop. IMO, Starbucks has a pretty good layout that could likely be used in its entirety.
For some reason i envision that 11E starbucks turning into a "neighborhood" bar. Dark wood, long bar, no pool tables or dart boards or loud obnoxious music. Just somewhere you could go to afterwork for literally just a drink and carry on a conversation with who ever...
Quote from: DetroitInJAX on July 18, 2008, 03:12:41 PM
Yet another blow to the "revival" of Downtown Jacksonville.. What a joke.
Yes, all hope is lost. Downtown's entire revitilization hinged on that starbucks. I don't know how 11E's going to get anyone to rent out their lofts now.....
Quote from: Jason on July 18, 2008, 04:21:07 PM
I don't think it will sit empty long. That space is ideal for a local coffee shop. IMO, Starbucks has a pretty good layout that could likely be used in its entirety.
Again, I really think the movers and shakers here at MetroJax need to contact Dunkin Donuts about this location. I think they would seriously consider moving in that space.
I checked DD's page for available franchises and they show Jax as "sold out."
For anyone who knows more about that kind of thing, does it mean that no more franchise locations can be added in Jax, or merely that an existing franchise owner would have to open it?
Quote from: Duke on July 18, 2008, 03:59:44 PM
Quote from: copperfiend on July 18, 2008, 12:17:52 PM
Quote from: Steve on July 18, 2008, 12:02:42 PM
I can't believe all four SJTC stores made it.
They are actually building another one.
Are there 4? The only ones that come to mind is the one by Publix and the one by Maggiano's.
I think he counted the one inside Target and the one inside Barnes and Noble.
Quote from: Duke on July 18, 2008, 04:34:00 PM
For some reason i envision that 11E starbucks turning into a "neighborhood" bar. Dark wood, long bar, no pool tables or dart boards or loud obnoxious music. Just somewhere you could go to afterwork for literally just a drink and carry on a conversation with who ever...
How about a coffee house/bar like Fuel?
Quote from: jaxtrader on July 01, 2008, 05:57:43 PM
Agree that 11E is far nicer than the Landing...I wasn't aware they had such a good deal on the rent :D..that might be a game changer
The Starbucks space at 11E will now be occupied by Super Food and Brew.
Super Food and Brew was the only project up for a vote at the 2/12/15 DIA Retail Enhancement Review Committee.
They will be receiving a $49,837 grant on a $99,678 total cost project.
COJ is the first lien holder of the property so a second lien position is being waved. This is being done because we are the DIA and we have the say.
The project scored 36 points out of 45.
Set for a DIA Board vote.