How is Starbucks NOT making money!?

Question

I keep hearing in the news that Starbucks isn't doing very well in profits. How can this be when there is a Starbucks on every corner these days!? (I live in Denver)

Answer 1

Starbucks has built too many stores and now their building expenses are cutting into their profits.

They don't sell the mass products that Wal-Mart does so that's why Wal-Mart can continually build and still have great profits.

Answer 2

Being on every corner is not a guarantee of making money. If they were on every corner trying to see you BBQ monkey meat on a stick would you expect them to be making a ton of money. Every business will go thru ups and downs. Some years they make a lot of money and some years they don't. Some years can even be negative but the company could still be a good company to invest in. There are many factors determining if a company makes a profit or not. Right now, lots of people are in a money crunch and going and spending $5 for a cup of coffee is not good financial sense. They are holding back on their spending with means that Starbucks is making less money. They have certain fixed expenses that have to be paid no matter how much they make (rent and property tax are a couple).

Answer 3

Starbucks has a lot of overhead. In the United States and Canada Starbucks offers full benefits such as health, dental, and vision insurance, as well as stock-option grants and 401k with matching to employees who work an average of at least 20 hours per week. Each employee can receive a box of tea or a pound of coffee each week if they choose. As of 2007, Starbucks was ranked by Fortune magazine as the 16th best company to work for in the United States, up from 29th in 2006. In 2005 it was ranked the 11th best.[10] Starbucks was also voted as one of the top ten UK workplaces by the Financial Times in 2007.

As the price of oil goes up, so does the price of coffee. If you charge more than what the market can bare, you lose your costomer base.

Answer 4

Competition is keen. Many companies, such as McDonalds have gotten into high priced coffees. Every corner has a coffee house. Many food stores have a section where you can purchase coffee and do your shopping.
Plus, coffee prices have risen, and Starbucks had to raise their prices about 6 months ago.
Also, they have overbuilt, and actually have a Starbucks on opposite corners in large cities.

Answer 5

Too many stores for one. When you have two Starbucks across the street from each other, that spells PROBLEM. Also in a local mall there is a Starbucks inside the food court and also a few steps away there is one in the Barnes & Noble bookstore.

Also the cost of milk is rising.

Answer 6

They are not making enough because they have not met their projected sales numbers. It means that wall street share holders will have lower dividends.
Also, if you raise the bar high enough and don't meet the numbers, its a way of cutting back help, increase the work load, and lower the quality of the coffee. But the customer won't notice the difference in quality of the coffee because the real flavor of the coffee is hidden with all those flavors. Plus you'll be paying 3.50 for a cup of coffee that is poor in quality. Your better off buying your coffee from Mobile on the run, Irvings, Gulf gas stations.

Answer 7

#1) over extension (the infamous Starbucks across the street from another starbucks)
#2) Their product isn't good and McDonalds and several gas stations have started targeting gormet coffee drinkers at a much lower price margin

Answer 8

They are making money. However, they may be losing sales because their coffee is not the same due to GREED. They expanded too quickly and enacted cost changes which negatively impacted the quality of their offerings.

GREED is evil. It leads otherwise smart people to make really dumb decisions and the tragedy is that a lot of innocent people are negatively affected because of it.

Answer 9

Maybe all those Starbucks on every corner are struggling. I don't understand why they ever did well with such expensive coffee.

Answer 10

Because the price of everyday basic necessities has gone up (and coffee is not one of them), people aren't as buying as much coffee, or are buying it from cheaper places. Plus they have two many locations. I can count a dozen off the top of my head not even counting the ones inside supermarkets.