The Starbucks House of Cards Begins to Fold with the Economic Crunch

Starbucks is a symbol of our times. The presence of a Starbucks shows that a certain region is thriving enough for it to have a coffee shop in the first place. People even ask directions to the nearest Starbucks although there are coffee shops popping up everywhere. However, the closing of 600 Starbucks stores will put about 12,000 people out of a job according to Michael J. de la Merced of The New York Times.

In a time where stocks are plummeting and the economy is in an uncertain state, it's inevitable that the symbol of excess and a booming economy would falter a little bit. In a society that has gas prices out of control, coffee isn't a necessity to a lot of people anymore. Well it might still be, but perhaps not from Starbucks. Normally, the news of a closing of a Starbucks (or 600 at that) would be a joyous one. Now local coffee shops would have a sporting chance to compete in the business. There are plenty of cafes around, yet none of them can seem to match the traffic the local Starbucks causes.

According to de la Merced's article, Starbucks originally planned to close only 100 stores. Apparently, though, the sales haven't been good enough to keep the rest of the 500 in operation.

Of course, it doesn't mention the mass lay-offs on the company website, but one can only wonder how that will even effect the economy. If even the all-powerful and monopolistic Starbucks needs to save the money from the paychecks of 12,000 employees, how hard have the other companies been hit? Will its Tazo teas be as hard hit as Starbucks? How about the eco-conscious Ethos water? Will those Frappucinos continue to be sold by the case in the local market?

The Starbucks stock was valued at approximately 26.05 this time last year, but what is it now? 15.62. Just like the automobile makers, Starbucks has suffered a double digit loss in its stock value.

Although the 600 closings will put a significant dent in the thousands and thousands of stores that Starbucks has in operation worldwide, I believe the actual decision to close so many establishments is an illustrative example of how hard hit the economy actually is. Starbucks was the last to go... or so I thought. It's in almost every Kroger (which is a grocery store/supermarket) around here and Meijier stores too (which are like Wal-Marts) aside from having separate buildings for themselves.

Perhaps it is not for the worst, though. It could be, in the end, a sign of pruning to stimulate growth, like plants, but that's wishful thinking.