Starbucks over indulging and under performing?

Last week Peter Mandelson, UK’s Business Secretary launched a humorous attack on Starbucks, and their Chairman Howard Schultz.  Schultz was quoted as saying that the UK economy was in a “downward spiral” and “very very low on consumer confidence”.  This possibly may be the case, however Lord Mandelson is correct in his opinions of Starbucks – that they aren’t doing too great either!  Mandelson explained at a party….

“Why should I have this guy running down the country?” Who the fuck is he? How the hell are they [Starbucks] doing?” I entirely agree!  Have they been over expanding? I think so.

You will know my opinions on the Starbucks brand from a previous post about coffee, but what is more so a fact is that whilst consumers may be starting undulge less in luxuries, Starbucks have been over indulging in their expanson plans and probably not doing their own research when determining which markets to enter.  You may recall that Starbucks last year started to pull out of Australia due to consumers of the coffee not being impressed with the product.  Australia is a big coffee drinking nation, and influence heavily by Italy – you don’t mess with Italians and coffee!!

So, Howard Schultz may be criticising the UK economy, but he cannot blame the situation with the economy entirely on the leadership of the UK.  Some business decisions made by Starbucks have been wrong – over-expansion and positioning shops in poor locations – and therefore the reason for Starbucks not performing so well currently are due to this and also customers becoming more wise on quality coffee and price…. so they may be going to the competitors.  I’ll be at Caffe Nero!

Click here for an interesting article on this from The Guardian newspaper.

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