February 18, 2017

Starbucks Struggles to Keep Growing

Starbucks Stock Has Lost Its Buzz - Fortune.com

Wendy's opened 58 new restaurants in 2016 worldwide, Starbucks 884,
just in the USA.
.

2 comments:

Richard Adams said...

Good discussion on the video.

Anonymous said...

This sounds very much like MCD in the 80's where they/we were going to dominate the markets and Quinlan said he felt sorry for our competitors! MCD became absolutely manic about building new stores thnking that our competitors would not grow because there was not enough business for everyone. However, no one told our competitors there would not be enough business after MCD had so many stores. MCD failed to address the quality of our tired products. Competitiors came into these "built out" trading areas and gave our customers an opportunity to try their products. Which they did. This was the beginning of MCD not being very special and racing to become "average". Chicken nuggets was introduced and brought back some past success but we were losing the battle in many trading areas. In an attempt to regain our past success we built "playplaces", we "remodeled", "rebuilt", "relocated" at great expense to the operators. Chicken was looked upon as our savior and it helped but fell short of expectations. A long list of new products to differentate us from our competition were tried with mostly disappointing results. Adding all these new stores coupled with expanding around the globe required growing the MCD employee's by nearly 300%. Rents and service fee's increased. The existing stores could not support ballooning costs and borrowing became an art form. Buffet withdrew and sold all of his stock saying MCD management was not as strong as he once thought. He has never purchased more MCD stock. It has taken nearly 30 years for management to bite the bullet and close 220 stores that should have never been built. It is likely they should close another 200 and be stronger. The MCD staff is still too fat and should be reduced by another 30%. My opinion, is that Starbucks is embarking across a very slippery slope. Unnecessary growth or growth for growths sake is extreemly expensive. Plus, starbucks is expensive. Once customers realize how much they are really paying they will experience resistance and it won't take long before those new stores will be a burden. They have a good thing going for them. I don't understand their thinking. I wish them all the bad luck in the world.