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Starbucks set to axe hundreds in the UK
Hugo Duncan29 Jan 2009
Starbucks will shed hundreds of jobs in Britain this year and close dozens of coffee shops as it feels the full force of recession.
Chief executive Howard Schultz said the US retailer saw weakness in Britain and Canada in particular as he revealed a 69% plunge in profits for the final three months of 2008. Starbucks is to close 200 stores in the US and 100 internationally, costing 6700 jobs — with the UK in the firing line.
Although Schultz did not say how many of the 700-plus UK stores will go, chief financial officer Troy Alstead said overseas closures will include Britain. It is likely the number of UK coffee shops closed will be in double digits. With each store employing an average of 20 people, job losses look set to be above 200 and could top 1000.
Coffee drinkers are trading down as recession bites. Many now shun Starbucks altogether while others are swapping their Frappuccinos for cheaper filter coffees. The firm has also felt the pressure from the likes of McDonald's, which has greatly improved the quality of its coffee, and is also cheaper.
The crisis at Starbucks marks the end of what was once-relentless growth at the coffee shops chain, which started out in 1971 with an outlet in Pike Place Market in Seattle.
Named after the first mate in Herman Melville's Moby Dick, Starbucks has since gone global. It even opened a store in the centuries-old Forbidden City in Beijing.
Quarterly profits were $64.3 million (£45.7 million) in the 13 weeks to 28 December, down from $208.1 million a year ago. Schultz, who will take a pay cut from $1.2 million in 2008 to $10,000 this year, said the company was working hard to “navigate the deteriorating global economy”.
In a letter to staff worried about job cuts, he wrote: “These decisions have been made to ensure the company is leaner and prepared to endure a worsening economic climate. The financial crisis is affecting almost every company in the world.”
Starbucks' revenue fell 6% to $2.6 billion, driven by a 9% drop in sales at established coffee shops. Schultz admitted the firm's decline is not all down to the recession, conceding that it over-expanded, and in the process devalued its once-upmarket image.
Reader views (16)
I love Starbucks, but even if you don't (and one's preferred coffee tastes are way subjective for each individual) the company has done a wonderful thing, which is to increase demand for coffee, and for spending time in coffee shops. So, the independents have seen their business rise, not fall, thanks to having a Starbucks in their neighborhoods. I travel to UK often, and appreciate how easy it now is to get a good cup of Joe, whether at a Starbucks or a local shop, compared to, say, ten years ago. A strong manager will assure well-trained baristas, so let him or her know when your order is not perfect - they want to know this. Unfortunately, a weak manager will cause poor service. When that happens, find another shop.
- Geoff, Washington, D.C., 23/02/2010 05:44
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It seems that it's still fashionable to dislike a successful company that provides something that tastes great and provides a nice to drink it. If you don't like what they sell, go somewhere else. No-one is forcing you go there! This is an example of typical British attitude.
- Simon, Leeds, 06/02/2009 22:11
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I go to Starbucks when there is not another better alternative. The product is generally consistent in quality at most locations in the U.S. When I lived in London, however, I found that the staff were relatively poorly trained compared to the U.S. This resulted in errors in filling orders, burned coffee, and inconsistent proportions of ingredients in drinks (too much or too little milk, etc).
- Gerald, New York City, U.S.A., 29/01/2009 22:48
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Starbucks, like Woolworths, has been in decline for a long time from facing competition that just outrates it and are using the recession as an excuse. Customers have been voting with their feet irrespective of price.
- Tom Moncrieff, london W6, 29/01/2009 19:28
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Good good good. be gone. Such a dreadful organisation and their absurd prices.
- Mel Barrows, Tenerife. Canary Islands., 29/01/2009 18:54
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Starbucks serve weak coffee, their food is over priced with hardly any filling in their sandwiches. They advertise they have wifi access, but you must pay to use it. No free papers, you must buy a copy of The Times! They also like other charge you more to eat inside, when most of the time there are no seats vacant. Wow! What a great company! Support your local Non-Chain coffee shop! Starbucks don't care about you! I don't care about them...
- Paul, London, 29/01/2009 18:41
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Good riddance
- Raymond, poole, 29/01/2009 16:01
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I found that most barista's in starbucks don't seem to understand english, i ask them to stir my coffee and they give me a blank look, one in parson's green fulham road was rude and didn't even put the lid on the cup so if there profits are down they need to give good customer service instead of the poor service recieved, and its not just the one branch it seems to be all the ones i've visited in london
- Simon, hemel hempstead, 29/01/2009 15:02
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Peter Noterfed, Paris, France - just to let you know and anybody else interested.
I watched a documentary a few years ago about "coffee houses" like the one above and the whole point of not serving a strong cup of coffee was so that the customer did NOT get a caffeine hit with the first cup!
Meaning they would have to purchase another to satisfy the craving and so "Double" their sales - they took pride in this tactic!
- Mike, London, 29/01/2009 14:49
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Their prices are eye watering. And they donate money to Israel. Their logo is full of Illuminati symbolism as well.
- Neil, london uk,, 29/01/2009 14:15
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Death to Starbucks!
- Paddy Mac, Kilburn, London UK, 29/01/2009 14:07
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Good
- Dave, London U.K., 29/01/2009 13:43
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I too felt that the rate that they were opening the new stores was pretty unrealistic - even if people were coffee adicts. In Woolwich there are 5 coffee shops - excluding the one by the newly opened DLR station
- Liz, thamesmead England, 29/01/2009 13:41
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Try making and providing a better and slightly stronger cup of coffee to the customer instead of the weak being served. This would improve their sales figures. I have found that even the coffee served in a Macdonalds now tastes better.
- Peter Noterfed, Paris, France, 29/01/2009 13:38
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So the recession has an upside too.
- Trevor, London, 29/01/2009 13:10
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I feel sorry for the workers but the rate of opening of coffee shops has been simply ridiculous, they are perhaps the best example of the homogenisation of high streets up and down the country. Our towns are rapidly losing their character and will soon be as dull as those in the States.
- Brian, London, 29/01/2009 12:18
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