Wednesday, December 5, 2012

For Starbucks, is the recession over? (Harlan Koch revisited)

In July 2008, I wrote a post in my Empoprise-IE Inland Empire blog about the closure of several local Starbucks. At the time I mentioned that this was part of an effort by Starbucks to close 600 stores.

Things were not looking well for the company, and most of my blog posts from those days cast the company in a negative light. Starbucks seemed to have lost focus, and was ridiculed by competitors when it closed all its stores to train its baristas in making coffee. It didn't help when it began to face competition from companies like McDonalds.

Well, things may be looking up for Starbucks:

Starbucks is planning to add 3,000 stores over the next five years, with at least half of them in the United States.

The company said Wednesday the new stores will expand its existing global network of 18,000 stores. Starbucks also plans to renovate many of its existing stores.

Cliff Burrows explained the difference between 2008 and today:

Cliff Burrows, who heads Starbucks' domestic business, said the problem wasn't that Starbucks was oversaturated, but that the company hadn't been careful about its store openings.

Burrows claims that they've become smarter about store openings, and that their new stores are performing well. At the same time, Starbucks has acquired companies that can provide new products in their existing locations - baked goods from La Boulange, Teavana teas, and the like.

If Howard Schultz can pull this off, then I'll have to go into my Jim Bakker "I was wrong" routine about the whole Harlan Koch thing. A few years ago, I was saying that Starbucks needed to be led by a passionate person like Harlan Sanders or Jim Koch, and that it didn't look like they'd be able to succeed with the things that they were doing.

Perhaps I was wrong. And you're just waiting to see if I have to do the Jim Bakker routine.

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