A Bitter Cup For Starbucks

Image credit: GreenvilleDailyPhoto.com (reduced by Cujo359)


This week, Starbucks, the largest coffee chain in this arm of the galaxy, reported that things weren't going so well:

Citing a decline of about 5 percent in sales last quarter, Starbucks projected weaker-than-expected earnings and cut its full-year forecast on Wednesday, sending the company’s stock down nearly 11 percent in after-hours trading.

Pressed by the Economy, Starbucks Lowers Its Forecast

Before I go on, I should make a disclosure:

I don't like their coffee.

Unfortunately, Starbuck's misfortune seems to be tied to larger issues than coffee that can eat through armor plate:

Howard Schultz, the chief executive, called the current economic environment the weakest in the company’s 37-year history, “marked by lower home values, and rising costs for energy, food and other products that are directly impacting our customers.”

Pressed by the Economy, Starbucks Lowers Its Forecast

I don't think he's making excuses. Their coffee's been bitter for a long time. There's no reason to think people have suddenly caught on. Schultz went on to add:

Citing company research and alluding to the increased competition from Dunkin’ Donuts, McDonald’s and other fast-food outlets, he said customers were not substituting Starbucks purchases with “coffee products from others.”

Pressed by the Economy, Starbucks Lowers Its Forecast

The lines do seem to be shorter at other coffee shops, so I'm inclined to believe this. I think this also means that there may be fewer busy people out there. If you have an extra few minutes, you can make your own latte at home. One thing's for sure, though - it's not good news about the economy.