Starbucks to Close More Stores Amid Glut of Coffee Shops

Starbucks will close 150 poorly performing company-operated stores next year about three times as many as it typically closes

Starbucks will close 150 poorly performing company-operated stores next year about three times as many as it typically closes

Notably, as from 2019, it plans to shift its focus for new stores in the USA away from areas where it already has a strong presence and to underserved markets.

Starbucks says it will speed up its store closings in the US next year as it tries to boost sluggish sales.

The resulting policy change prompted the mega-retailer to allow all persons to use the restroom facilities without requiring a purchase, effectively turning the neighborhood coffee shop into what some customers described as a "homeless shelter".

In previous years, the Seattle-based chain has closed an average of 50 stores a year, but this fiscal year will the demise of about 150 locations.

"Same-store sales comparisons are slowing".

Starbucks shares slipped almost 2 percent in after-hours trading.

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"The competitive environment has really become a lot stronger in the USA and a lot of that is the fast-food chains really improving the quality and breadth of their offerings in terms of hot beverages and breakfast", said Bloomberg Intelligence analyst Jennifer Bartashus. The mandatory training program, which outgoing chairman Howard Schultz said had cost the company tens of millions of dollars, was enforced after two black men were arrested at a store in Philadelphia while waiting for a friend. "That becomes an area of concern for Starbucks". In the past year, Starbucks has opened nearly 1,000 new stores in the Americas, which includes the U.S., Canada and Latin America.

"We're putting more of our energy into that afternoon day part and the portfolio of beverages that are offsetting some of the declines we're seeing in Frappuccino beverages", Johnson said, citing a consumer shift away from sugary drinks.

The report also indicates the 150 closures are about three times as many as the company usually closes.

Johnson said Starbucks has not reached saturation point in the USA, but it will be more strategic about where it puts new stores, focusing on underpenetrated markets in "Middle America".

"The China market still offers a lot of potential", Bartashus said.

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