Starbuck's Woes

Above find one overgrown boarded-up Starbucks. This Southampton, NY location was only open for a perhaps a year before shuttering.

What happened? Don't the wealthiest people on planet Earth drink $4 lattes?

It's on a major road in a good, vibrant location next to the highest grossing 7-11 in the country....so what gives?

Anyways, this particular store is owned by *corporate* so the braintrust shareholders are on the hook for the entire ten year lease. Apparently the lease had no *re-let* provision; and in this economy it's unlikely the landlord will get a high enough offer from another concern that would induce him to let Starbucks out.

Even if s/he found someone willing to pay say three-quarters of what they're receiving now, and they figured that along with a *buyout* from Seattle, this owner would probably be safer collecting from Starbucks - lest his new tenant declare bankruptcy down the road.

Locally, a new Starbucks opened in my grocery store this year. I'll bet it wasn't open 3 months before it disappeared as well.

Altogether, I believe Starbucks has closed 900 stores in the past year or so - 70% of which were opened post-2006.

Now I'm not a wage slave (though some of my best friends are!) and I don't ever drink coffee, so I admit to knowing nothing about the coffee business. However I have seen that McDonalds and Dunkin Donuts in the Northeast have jumped headfirst into coffee products - and at a lower price point.

The problem with Starbucks, I suspect, is that there are no customers *trading down* to their offerings in this market a la McDonalds and Walmart. And that's a problem today for luxury goods in general.



When reality eventually descends upon the stock market....this one will most definitely see single digits again.

Worst Marketing Image Ever

I was in Hingham Center the other day and I saw a little storefront advertised as "Brewed Awakenings". Turns out it is a chain.

Right away, I understood that it had to be a coffee shop but I could not quite stomach the name.

For me, it evoked memories of my father's formidable early morning flatulence.

To boot, there seemed to always be coffee, being prepared or consumed, as a backdrop as well.

Perhaps these scars explain why I never drank coffee?