The Seattle Times Jon Talton suggests the coffee-maker’s ongoing financial problems may be an “artifact” of deeper economic troubles:
“What if Starbucks is an artifact of an economy that’s not coming back? A time of rising, if fleeting, American affluence as we moved from dot-coms and telecoms, to day trading and house flipping, all based on the biggest run-up of debt in the history of the world. For this venti, triple-shot America, it might have been the quintessential bubble drink…
Although Starbucks suffered a 77 percent drop in its fiscal second-quarter net income, it actually beat analyst’s expectations slightly. Its shares have been generally rising since March and have outperformed the Standard & Poor’s 500 Index… Still, same-store sales remain in negative territory, a critical measure for any retailer. For two years, it has underperformed the Dow Jones Restaurants and Bars Index (yes, there is one).
Looking back, Starbucks’ fall was a leading indicator of the trouble massing across the land. Now the question becomes whether the America that emerges from the financial shock of the Great Disruption will have the appetite, and the cash, to fund Starbucks’ hopes. How long will Wall Street just wait and see? However the recession has changed America, Wall Street is still in a pre-2007 mindset, and it may demand growth that Starbucks simply can’t deliver anymore.”
May 20th, 2009 at 2:28 pm
Starbucks fall has less to do with the changing economy and more to do with their movement away from what attracted people to them in the first place. Countless independent coffee shops (i.e. Gimme! Intelligentsia, Stumptown, Alterra) are thriving because they are taking espresso to the next level. Starbucks thought they could install super-automatic espresso machines to replace the barista. I can go to McDonald’s for that.
May 20th, 2009 at 3:07 pm
I am sitting in a packed starbucks right now (4:00 pm EST) in metro DC. I think the author of the article is reaching looking to starbucks as a leading indicator of the economy.
It is full of creative class people on lap tops and families enjoying a summer day. As long as people are mobile and connected, they will look to places like starbucks for ’stop’ overs or ‘workspace’.
If we trash 3rd places, what else should we throw away due to this downturn? The internet? Biotech?
May 21st, 2009 at 9:36 am
I wonder how much of problem is the homogenity of the Starbucks’ brand. Sure, times are tough, but people still want that human/social third space experience. I see my local coffee shops bustling. The authentic/local regional flavor- local food, artists and musicians- gives me more value. I would rather have a more “dense”/authentic experience- it’s about way more than the coffee…I’ve been bored by Starbucks for awhile now.