Starbucks has tried everything to stem their downward spiral: adding smoothies to the menu, introducing a new house blend, launching a social-networking site, and releasing a Sonic Youth compilation CD. It hasn’t worked, though, and the cost of all that mad expansion (or “irrational exuberance,” as Alan Greenspan used to call it) has come due. The company announced today that it is closing 600 stores and laying off 12,000 employees. They’re mostly new stores, too — 70 percent of the doomed outlets opened as recently as 2006. And, as you might expect, there are a lot fewer new stores on the way: The company now expects to open fewer than 200 U.S. locations in 2009. It’s a far more dramatic setback for Starbucks than anyone saw coming: Previously, the company announced that it would close only 100 spots. That projection turned out to be as optimistic as a timely opening of the Freedom Tower. Starbucks is in an out-and-out free fall, and no man can say when it will stop. There may be some hope in international expansion, the Times notes; there are still any number of countries that aren’t fed to the teeth with Starbucks. We can’t imagine a place like that.
Starbucks Announces It Will Close 600 Stores [NYT]
Starbucks Increases Number of U.S. Company-Operated Store Closures as Part of Transformation Strategy [Starbucks Press Release]
Grub Street’s Complete Coverage of Starbucks’ Travails