Starbucks closes stores

So lets take a look at Starbucks is it just another case of over expansion or perhaps a bad economy eating into consumer spending or is there something even more fundamental?

First some history,

For years I have used something called the “Starbucks test” to gauge the economic vitality of potential clients. The test simply says, the more expansive the coffee chosen by a particular consumer the lower there prospective net worth. The theory is simple the less money you have the more significant short term gratification plays in your consumption. People with more substantial net worth have many avenues in which save and spend and self actualize or feel significant. Let’s face it $10 bucks maybe a lot for coffee but to tuck $10 away for a rainy day is not nearly as gratifying. People with less means get a so much greater feeling of significance spending the money right away instead of saving it .That $10 bucks for a rainy day, that in the end is still only $10 ,which saved or not still hardily amounts to anything.

Since Starbucks has in my view lost its way ,the “Starbucks test” is no longer as valid as it once was.

In my view Starbucks is struggling because of 2 basic reasons 1) is over expansion ,enough said that seems obvious to most of us and 2) and significantly more serious, abandoning the “coffee house” look for the typical “sandwich shop” knock off look. The mass produced “coffee house” look was what made Starbucks ah Starbucks , and with out it ,its just not Starbucks .The fact that they continue to worry that Mac Donald’s selling better coffee is proof positive that the company has lost its way.


*this is not a recommendation, solicitation, offer it is the opinion of the author and only the author