Coffee brakes? Not in Japan where Starbucks roasts the competition
Starbucks can be considered a true cultural phenomenon of the modern age. Established in 1971 as a neighborhood retailer of gourmet coffee beans and fresh roasted coffee, the Seattle-based coffee superpower now boasts 15,012 stores in 44 countries around the world. All is not well in the aromatic halls of Starbucks, however.
The Wall Street Journal reported on July 1, 2008 that Starbucks will “close 600 underperforming company-owned stores and further cut U.S. expansion plans for the fiscal year starting this fall amid growing economic uncertainty heading into summer.”
"Grounds" for concern?
The numbers are brutal: 19 percent of all U.S. company-operated Starbucks franchises opened in the last two years are set to close and approximately 12,000 workers (7 percent of Starbucks' global work force) will be adversely affected through mid-2009.
Owners of Starbucks stock have seen its per-share value drop by half over the past year, provoking a serious case of java jitters among investors large and small. Or should that be vente and tall?
Blue mountain + coffee
Has Starbucks' caffeine-fueled latte bubble burst? Perhaps not – foreign subsidiaries are doing just fine and Starbucks Japan is a perfect example. In 1996 Starbucks opened their first overseas store in Tokyo; one of their best known locations is a glittering showpiece store in the heart of the Ginza, Tokyo's famed high-price shopping district.
Sipping pretty in some prime real estate
After a dozen years of carefully calculated expansion, Starbucks Japan's numbers still look golden with both revenues and profits healthily in the black. As well, “Sutābakkusu” (pronounced “staa-bahkss”) is on track to open 100 new stores in Japan this year according to Japan Marketing News.
Competition is fierce in the Japanese market, however, and Starbucks must compete with the popular McCafe outlets run by McDonalds.
Everything be juicy at Starbucks Japan!
It remains to be seen if, like in the USA, Starbucks Japan's impressive growth is merely a reflection of constant expansion or a function of the company's efforts to cater to local tastes and explore new market niches. For instance, while Starbucks USA has cancelled a long-awaited line of hot breakfast entrees, Starbucks Japan has found a winning formula with its “Wellness Sandwiches”.
The chain has also set its sights on the espresso stratosphere, with rumors of a luxury Starbucks coffee franchise in Tokyo's ritzy Roppongi Hills neighborhood. JMN predicts “hand-pressed Starbucks coffee going for up to $12 per cup”. Cool beans!