Who would have thought too much Starbucks would be a bad thing? CEO Kevin Johnson thinks so. That’s why he’s planning on shutting down 150 Starbucks locations within the next fiscal year.
A third-quarter financial forecast showed the company struggling to meet expected sales goals. Market shares dropped around 7% in Starbucks stock when this news arrived, prompting the CEO to make the tough call: There are too many Starbucks locations.
Overcrowded areas where multiple coffee shops are in close proximity have led to individual stores underperforming. Locations were competing with each other despite being in the same company, when their real competition was niche coffee houses and chains like McDonald’s who are now a catch-all for fast and cheap food, including coffee. Any business owner should take into consideration the distribution of their locations, as developing more stores actually led to a decrease in profit in this case.
In 2019, the shift for Starbucks will be to eliminate these overcrowded areas and only develop new locations where there are few to no Starbucks. While some people may think that the recent drop in sales was because Starbucks closed locations for a few hours on the account of racial bias training, the truth is that Starbucks is literally invading every street corner, causing individual locations to underperform.
