Starbucks to Close 600 Locations

Jason Calacanis, CEO of Mahalo, noted in his Twitter post earlier that it appears that Starbucks is closing 600 stores. For libraries pondering whether or not it is best to have a coffee shop in the mix, this brings up a point of business economics we rarely have to encounter. Coverage by Mahalo's team of the stories relative to the event can be found online at Mahalo.

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And the economic point is

And the economic point is what? That the amount of disposable income might have an effect on viability of luxury items? Location can matter? Don't price yourself out of business? That large-scale chains that have set menu items and pricing may not succeed everywhere?

Not trying to be jerky, I'm just not sure what the point here is. People have been commenting for a long time that Starbucks was expanding too rapidly. In some senses it can be a viable model. Set up a dozen coffee shops, drive out some competitors, and see which one makes a profit. Close down the ones who don't. They have the cash for it last I checked.

Another way to look at it

Do libraries want to be involved with a partner that is not profitable and is shutting down locations? Putting coffee shops in academic libraries was a big thing a couple years ago. After watching one particular stock slide down to where the company may soon cease to exist, the economic question is whether or not it makes good business sense to work with a partner facing such troubles.

After all, would you want your library left with a coffee shop to handle if your partner couldn't keep it going as part of their business?
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Stephen Michael Kellat, Host, LISTen

Does Starbucks reflect entire coffee market?

There's no numbers on coffee shops besides Starbucks or the locations of these coffee shops that are being closed down. I'd be more willing to see some significance if it was coffee shops in general or coffee shops in bookstores and the like. Starbucks went crazy with expansions. I mean, how many times did you hear about a location where Starbucks put up two coffee shops on the same street, on the theory that people would not want to cross the street?

The general state of the economy should have been the warning signs that high-end, redundant coffee shops were in trouble. I'm not convinced that this maps to coffee shops in libraries.

Let's look at these factors:

1) There seems to be evidence as the economy dips down library use starts rising. That means there's more bodies in the location of the library and less people downtown shopping.

2) Starbuck was on the high end of the market and sell their name as much as their coffee. To say Starbuck is having trouble is like saying because a designer jean company is having trouble, people are not buying jeans. I would wager that though if Guess jeans or one of the designer brands sees a drop, it's not necessarily reflected by other companies like Lees. People are probably not going to the library just for the coffee, but it adds to atmosphere and can probably have a positive affect on socialization and community development.

3) If your coffee shop is local, you have much more flexibility in pricing and targeting the local area. Maybe have teas, shakes for the kids, etc.

Honestly , this seems like a stretch and a bit of FUD myself by those who don't like things like coffeeshops, cafes etc. in libraries.

After all, what's the risk? If the coffee shop is being done by a third financial party and they can't keep it running, what is the library out? It tried something and it didn't work. If the library didn't invest in it besides space, the space can be used for something else. If the library has invested some money in it, hopefully it was money that was a reasonable risk. Of those libraries with cafes around here, I don't know of any that use Starbucks coffee.

I would hope

I would hope that if a library or library system was looking into hosting a cafe/food service in their building, they might...oh I don't know...do some background business research on the company to see how it's doing.

And I wouldn't worry about Starbucks

They're #4 this year on Restaurant & Institutions Top 400 Chains:
http://www.rimag.com/info/CA6574478.html

600 stores won't make a huge dent, especially now that they've bought out comp,ete ownership of the new "Clover" coffee machine.

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