Starbucks Closes 61 Stores in Australia
Starbucks is closing 61 out of it's 84 stores in Australia. This is a lot of stores to say the least. From my understanding, the economy in Australia is not suffering, and other specialty coffee retailers are doing pretty good. I wonder why the huge cut back so soon?
My assumption is that espresso was a little late on the scene in Australia and maybe assumed the consumer to be more like those in the US. Australia seems to follow a more European style of espresso consumption, and I relate this to if Starbucks opened 84 stores very quickly in Italy or Croatia or somewhere where their business model may need a lot of tweaking to work.
This still goes with my theory of FOCUS, and another decision by Howard to take control of what made Starbucks successful in the first place.
Read the full article here
My assumption is that espresso was a little late on the scene in Australia and maybe assumed the consumer to be more like those in the US. Australia seems to follow a more European style of espresso consumption, and I relate this to if Starbucks opened 84 stores very quickly in Italy or Croatia or somewhere where their business model may need a lot of tweaking to work.
This still goes with my theory of FOCUS, and another decision by Howard to take control of what made Starbucks successful in the first place.
Read the full article here
Replies to This Discussion
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Permalink Reply by Denise Smith on
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Any word what the companies plans are for all that used equipment (all over the world)?
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Permalink Reply by Instaurator on
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Matt I think you are right that Starbucks were "a little late on the scene in Australia" - about 20 years too late. I think they under-estimated the strength of the independents downunder and that's why they are having to close down about 75% of their stores here. To put it in perspective: imagine if Starbucks were closing not just 600 hundred stores in the US, but 75% - that would be more like 6,000 stores closing in America. This is major surgery for their international stores although they have stressed that Australia is the only international market they are doing this in. But hey any time you want to visit down under we should still be able to find a cafe to serve you a coffee.....
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Permalink Reply by Alun Evans on
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I think Matt is right. Australian and to a lesser extent Kiwi Coffee culture owe a lot to the influx of migrants from Italy, Greece and the former Yugoslavia after World War 2. Migrants from these countries played a big part early on in moulding coffee drinking habits in two countries where the norm was coffee made from coffee essence or instant coffee. In a 2004 survey of Australian coffee habits, it is interesting to see that instants still make up a big part of the market (although that is changing rapidly). Starbucks have said that Australia is the only International market being assessed... In NZ Restaurant Brands who also own Pizza Hut and KFC are the partner. They are really struggling with the Pizza part of the business, while Starbucks is doing only OK. I guess it is too early to say what impact this decision may have on thir Asian business- although I think maybe there will be some negativs. I say this because in Asia perception is one of the prime drivers in Brand/Store growth. I remember the ripples of rumour I heard at recently at the Jakarta airport Business lounge when the US announcement was made. The topic of debatewith several groups of businessmen was that there must be something wrong with Starbucks coffee...if they are closing so many stores in the USA. By my last count there was 62 stores here in Indonesia, built over the last 5 years- however despite the size of the country the market is pretty much the 20 million estimated "affluent" or middle class Indonesians spread over Jakarta, Bandung, Surabaya, Medan, Jogya, Palembang and the Island of Bali.
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Permalink Reply by Matt Sheridan on
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Although this was posted over two years ago, it is worth commenting on from an Australian perspective. The global financial crisis has a lot to do with this. Starbucks capital model was obviously called in when investments to a nosedive on the exchanges. The paper the money was written on just simply was not worth as much hence your margin lending is going to be called in. Australia has a number of chain stores. Most of them are franchise models as opposed to the Starbucks model. It is true in a way what Matt is saying, Australia has been developing a speciality market and the end consumer has been on a steep learning curve for the last few years. In that regard, we have been spoilt. Paying the premium for high grade beans now is causing the problems though.
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Permalink Reply by Marek on
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I think it was Brazil, but a few years back $bucks closed all their stores there. About a year ago I saw something that they were partnering with a local espresso chain to come back into the market. This isn't the first time this has happened. Italy, Israel and other markets have proved impossible for $bucks to crack.
As to equipment, they don't have anything I want... except those plush chairs. That's it... not the patio furniture, not the inside tables or chairs, the counters and shelves, the equipment... all useless and worthless.
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