In an attempt to stop hemorrhaging money, Starbucks—whose stock price has tumbled over sixty percent since October ’06—recently announced the impending closure of over six hundred stores, including twelve in the Puget Sound region. Here’s a look at what went wrong for the largest dealer of legalized drugs in America, and how you can cope with the crippling withdrawal.
What do they do?
Starbucks’ business model is ostensibly based on selling coffee, the mind-altering drug of choice for busy self-important professionals. In recent years, they have deluded themselves into thinking that people visit their stores for the “atmosphere” rather than the drugs. This has led to a series of inexplicably poor business decisions such as CD kiosks, placing as many as seven stores on a single block, and attempting to sell $12 pastries.
What went wrong?
A host of problems have beset the company. Other companies figured out that they can sell the same drug for a lower price, and without all the frills. The saturation point of most blocks was apparently only six stores. The housing boom turned to bust, which is a convenient scapegoat for lots of stuff, so why not Starbucks, too. Also, Howard Schultz.
Do analysts see a recovery?
Starbucks has a market capitalization of $10.44 billion, with annual revenues over $9 billion. Citi Investment Research analyst Joe DeFabio predicts the company will rebound in the next two years. Goldman Sachs analyst George Percival expects them to lose over $75 billion, and fold sometime in 2010. Isn’t that helpful.
How can caffeine-addled espresso junkies survive with five percent fewer Starbucks?
Five percent is a lot of stores, but the pain is especially acute if your preferred dealer is one of the six hundred. Fortunately, there are many alternatives methods of getting that sugary caffeine high. Try carrying a stash of chocolate-covered espresso beans in your briefcase or purse. Or, there are places on the internet where you can order in-home IV kits. Just brew a pot in the morning, strap the IV to your arm under your polar fleece, and enjoy a constant flow of java straight into your bloodstream all day. If all else fails, you may be forced to walk an extra block for your fix. Consider getting a Segway to reduce the unnecessary stress on your feet and knees.