Tuesday, July 1

Starbucks to close 600 stores in the US  

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According to MSNBC, "Starbucks Corp.has drastically increased the number of stores it plans to close and could eliminate as many as 12,000 full- and part-time positions as a result." Out of the 7,087 Starbucks stores, 600 will be closing, which is around 8.5%. This was up from the previous plan to close 100 stores.

Starbucks also said it will open fewer than 200 stores in its coming fiscal year, which begins Sept. 29. That’s down from a previous target of opening 250 stores during that period.

Starbucks, known for sometimes going so far as to open stores across the street from one another, has recently acknowledged that it may have lost some of its luster during a long period of rapid store openings and expansion into everything from breakfast sandwiches to movie promotions.

Earlier this year, Starbucks Chairman Howard Schultz returned to the chief executive position, and the company vowed to make major changes. That has included plans to bring in new products, the introduction of a new, smoother coffee blend that is now served at most stores and a decision to stop offering breakfast sandwiches.

Starbucks will take an after tax write-down of between $328 million and $348 million related to the store closings. But because of tax benefits, it expects to see total cash outflow of about $100 million. Starbucks stock is up 6.5% in after hours trading.

I guess Starbucks is not that immune to the weak U.S. economy and the effect of high gas prices. With that in mind, coffee lovers would rather just go to other local coffee shops that serve cheaper coffee but might even taste better. Starbucks, after all, has been struggling to please some customers with its "burnt" coffee lately.

Goodluck to Starbucks and hopefully the baristas who were affected by the closing get transferred to another Starbucks store or get hired by another coffee shop who can use their experience. Oh yeah, my cousin Mario is working in a Starbucks in the Pacifica, San Francisco area. Hey Mario! Is your store affected??

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