I'll have mine w/o the whipped - revised

July 8, 2008 | Sacramento, California | Vetting explained

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Last updated: July 8, 2008

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Starbucks has become a true bellwether, so when I first heard they were closing 600 stores, I was a little surprised, and I don't surprise easily. Starbucks is on almost every corner, airlines, not to mention in hotels, stores, and many other places. Now I consider myself a glass is half-full kind of guy, however, with all the doom and gloom around these days, it's really not at all very surprising. We do not have to look any further than Starbucks to understand that we live in a global economy. The announcement earlier this week of 600 stores closing would have just devastated any number of companies, however, it didn't seem to shake investor's confidence in the company. Why should it? Starbucks is universally known, has numerous products, several alliances, has a great reputation for treating its employees well (tip issue aside), and has shown steady growth, however, the stock has tumbled almost 50% during the last year. Now that is quite a dip, however, given the state of the economy, that's not very surprising either. Can Starbucks bounce back with only a black eye? Recently, there have been new players to specialty coffee drinks by well known companies, such as McDonalds, Dunkin' Donuts, Wendy's, and Krispy Kreme, that are sure to stir the coffee business, and will most likely take a grande or two away from Starbucks, however, that is the nature of competition. The fact that the stock didn't drop like a brick when Starbucks made the announcement they were closing 600 stores, even though it was known that some stores (not as many as 600) would close, speaks volumes, although some may argue the announcement was already factored in. Starbucks has "built one of the most recognized and respected brands in the world", and with the continued sluggishness of the U.S. economy, made a decision to close 8% of their U.S. stores. At the same time, they plan to expand internationally, and expect to have 40% of their stores outside of the U.S. within 3 years, compared to 29% today. The decision to continue to expand abroad in today's market will keep their business brewing. Here in the U.S., they continue to introduce new products, and roll out new programs that will keep the beans roasting, and will continue to grow. Starbucks may have not made the best decision a few years back to expand domestically, however, they took a risk, and now they are making an adjustment. Can this adjustment keep them from being roasted? I believe it can. Howard Schultz, in his message to his employees (partners), acknowledges throughout the history of Starbucks aspiring to place "our people first", and will place many Starbucks partners in other stores, and those that aren't will be "offered a severance payment to aid their transition", part-time, and full-time. I give Howard a BIG KUDOS for that! While many individuals, and companies are facing challenging times these days, I give Starbucks a thumbs-up for, as Howard states at the end of his message to his partners on the Starbucks website, "Onward". I give Starbucks another thumbs-up for the frozen lemonade I recently tried. As a side note, Howard Schultz is attempting to keep the Sonics in Seattle. In the words of another iReporter, it's CrunchTime. I say Pump It Up Howard! Good luck Seattle! Mike Otis http://bringingbusinessbacktocalifornia.com/

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Could you live without Starbucks?

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