Starbucks to close 150 locations

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By John R. Harris

Starbucks expects to close at least 150 stores nationwide by the end of 2019. The announcement, released via a notice to investors a couple of weeks ago, did not specify which locations will close, only that closures will affect “underperforming company-operated stores in its most densely penetrated markets.”

Starbucks operates more than 50 stores in the North Orange County area but staff at two Stanton-area locations had yet to receive details of the plans. The manager of the Katella and Meridian store declined to speak on the record, referring all questions to the company’s headquarters in Seattle.

Historically Starbucks averages 50 closures per year, according to a company spokesman, but slowing growth has led the company to “optimize its U.S. store portfolio at a more rapid pace.”

The company will seek to shift new store growth to under penetrated markets and will slow the growth of licensed stores—those found inside other retailers such as the Target superstore in Cypress—as these tend to be less profitable than company-owned stores.

“Our recent performance does not reflect the potential of our exceptional brand and is not acceptable,” Starbucks CEO Kevin Johnson said in a statement. “We must move faster to address the more rapidly changing preferences and needs of our customers.”

With over 28,000 stores across all markets Starbucks is the third-largest fast food chain the world, behind Subway and McDonald’s, but same-store sales have struggled in the past few years.

The company seeks to speed innovation in its core coffee category whilst increasing its presence in the burgeoning tea market. (Ironically, the company only recently closed the Teavana tea chain and dropped the Tazo tea brand—decisions that may now be revisited).

The company’s notice to investors revised their quarterly earnings forecast downward to 1% from an initial 3%. That news sent company stocks tumbling 3.5% in after-hours trading.

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