Is Starbucks Closing Stores?
The coffee industry has seen a revolution in recent years with the introduction of Starbucks. This coffee house offers a variety of products such as smoothies, tea, sandwiches, pastries and more. The coffee house enjoys a cult following due to its free Wi-Fi and its popularity among people who like to work.
In June 2020, the company announced that it would close 600 stores in North America by 2021. This was shocking to its customers and made them curious. In October later that year, the company announced that it would close 200 additional stores in North America, and another 250 international stores closures would soon follow.
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Let’s look at the reasons behind this move of the Coffee Giant:
1. Low profitability
Every Starbucks store is periodically reviewed against the standards set. If they are unable to meet them, they are given a chance to improve.
The stores that are being closed are the ones that did not meet the expectations of the company. They either did not have enough customers or the overheads were too high. The closures are thus seen as a routine affair and a diligent move by the company.
2. Impact of Coronavirus
The Coronavirus pandemic hit the revenues of businesses drastically. Even the coffee giant could not escape its effects.
The company’s income levels decreased significantly in 2020, as compared to 2019. The company is closing the lower performing stores, in order to focus on areas where they are needed more by the customers.
3. Remodeling efforts
Starbucks is remodeling its stores in order to align with modified customer behavior. In October 2020, the majority of its sales were made through drive-through and mobile orders. This is in line with the company’s recent trends, which have seen it focus on innovative measures in order to boost sales.
The company is focusing on opening stores that support a drive-through lane so that it can do away with seating. In this way, it can operate even during social distancing restrictions. It wants to focus on pickup and takeaway. It also wants to more extensively use technology, especially its app to enable customers to order their beverage and track it. In urban areas, it has also partnered with UberEats for deliveries. It wants to reduce human-to-human interaction as far as possible.
4. Curbing Unionization
Starbucks has closed two of its stores in Buffalo, New York, in an effort to quell the unionization efforts by its employees. The company is against unions and a temporary closure is being used to communicate this to the employees. There have been reports of its high-level executives traveling to these areas and holding meetings.
Conclusion
The store closures can be seen as a result of a variety of reasons, including low profitability, the coronavirus pandemic, and the change in strategy.
Starbucks is closing cafes all over the United States, but it’s not going away. The company is more viable now that it has a stronger financial position, and it plans to open more stores. These measures will help Starbucks achieve long-term growth.
Small indie cafes are quickly taking over the space Starbucks left behind, providing customers with a variety of services not found at the larger chain. Additionally, these cafes give customers the opportunity to interact directly with the small business owners and receive personalized service. ..
Starbucks is opening up 850 new stores in North America and 1300 new stores internationally. This will result in more stores overall. ..
The recent closures of stores in the company’s drive-through lanes should be seen as just a change in portfolio, as the company is likely to open up new stores that are more profitable.
