Starbucks will close 150 poorly performing company-operated stores next year, about three times as many as it typically closes. The affected stores are located in mostly urban areas that are densely populated with Starbucks locations. The company told investors late Tuesday that it expects same-store sales to grow just 1 percent for the quarter that begins next month, lowering its previous guidance. Starbucks closed 8,000 stores on the afternoon of May 29 to offer roughly 175,000 employees mandatory anti-bias training after two black men were arrested at a store in Philadelphia while waiting for a friend. Outgoing chairman Howard Schultz said the training cost Starbucks "tens of millions" of dollars.
Total Retail's Take: I think the key takeaway here is that the affected stores are located in mostly urban areas that are densely populated with Starbucks locations. In my mind this isn't a case of the coffee brand losing consumer demand — take a look at the long lines at the Starbucks in any of the convention centers where retail conferences have been held this year, from the Javits Center for NRF Big Show to McCormick Place for IRCE — but rather oversaturation in select markets. Walk around the streets of Manhattan, Chicago, San Francisco or other urban areas and you seemingly can find a Starbucks on every other corner. That level of store penetration reaches a point of diminishing returns, and it appears Starbucks is there.