This week the Seattle-based coffee kahuna announced it is closing 600 of its 6,800 US stores and laying off more than 12,000 employees, or "partners" in the company's New Age-y jargon. The bad news is the culmination of a long, downward spiral. During the past year, the stock has dropped nearly 50 percent, as the allure of high beverage prices and Italianate jargon - what does "venti" mean, anyway? - fades away, along with Americans' discretionary income.
It couldn't happen to a nicer bunch of people. The collapse of Starbucks, I mean.
This week the Seattle-based coffee kahuna announced it is closing 600 of its 6,800 US stores and laying off more than 12,000 employees, or "partners" in the company's New Age-y jargon. The bad news is the culmination of a long, downward spiral. During the past year, the stock has dropped nearly 50 percent, as the allure of high beverage prices and Italianate jargon - what does "venti" mean, anyway? - fades away, along with Americans' discretionary income.
!ADVERTISEMENT!
Starbucks had a unique selling proposition: Let's charge $3 and up for an above-average coffee drink. It wasn't a blindingly original idea; Alfred Peet, mining the European café tradition in Berkeley, inspired the original Starbucks founders in Seattle and George Howell's Coffee Connection in Boston. But huckster-visionary-entrepreneur Howard Schultz took the Starbucks concept and wallpapered the land with the buxom green mermaid logo and espresso-slinging baristas. Schultz was the Ray Kroc of coffee (Kroc was the fellow who bought the Golden Arches from the original McDonald brothers) but acted more like Deepak Chopra.
While behaving like a Gilded Age robber baron - just for a lark, Google the words "Starbucks" and "labor unions" or "fair trade" - Schultz positioned Starbucks as a countercultural concern. The company hyped its sofa-stuffed lounges as a new, American "third place," an alternative to work and home. I'm always amazed at the high-class hobos who clutter up Starbucks, the MacBook "novelists," and the Bluetooth-enabled "consultants," nursing their lattes and milking the Internet. The Dunkin' Donuts outlets in my neighborhood offer a glaring contrast. I hit Dunkin' a few mornings each week after exercising. It's the only time of day when I interact with men and women who actually work for a living.
What went wrong at Starbucks? To invoke the venerable business cliche, they didn't stick to their knitting. Their core business was overcharging consumers for coffee, and a very lucrative business it was. Then they started selling dreamy CDs, and the company even helped produce a movie, "Akilah and the Bee," that bombed at the box office. Schultz bought a basketball team and started hanging out with Mick Jagger and Paul McCartney, the usual recipe for business disaster.
Starbucks also made it their business to save the world. The world needs saving, I can't argue with that. But I wonder if Starbucks is best qualified to perform the rescue. To be fair, the company tries harder than many others to provide decent health benefits for its employees, and I suppose they are welcome to sell "Ethos" water and educate rural teachers in China. But if they don't figure out a way to move more java, they'll lose the opportunity to feel wonderful about themselves. You can't do good if you aren't doing well.
What now? Starbucks is throwing a couple of Hail Mary passes. They've just introduced a new, brewed coffee called Pike Place, which tastes OK, and, like their other regular brews, costs the same as Dunkin's coffee. ("Swill," as Schultz rather ungraciously calls it in the current issue of Portfolio magazine.) Taking a page from Jamba Juice, Starbucks plans to start offering "healthy," protein-boosted smoothies and a new frozen drink, which Schultz is calling "a game changer in the coffee space."
It's hard to change a game that's already over, but there's no harm in trying.
Free plug I spotted this line in Portfolio's Starbucks article: "By now, many of the coffee snobs have gone elsewhere." So true! Check out the website of the George Howell Terroir Coffee Company, terroir coffee.com. Howell is a local legend, but the dishy prose on his website reads like an Onion parody of the Wine Spectator: Of the South Italian Calabria-style espresso, Daterra, we read: "As a ristretto, this new roast style produces a rich and velvety crema with a deep reddish-brown color and unfolds into dense marzipan, cherry and caramel brownie on the palate, exhibiting a viscous syrupy body with a lasting sweet finish."
Sounds . . . gross.
