Starbucks yesterday announced the closing of 600 stores in the US and the elimination of 12,000 full time and part-time jobs. It also burst the long held belief that the $4 cup of exotic gourmet coffee (sorry latte) was an affordable luxury, recession-proof even in the worst of times. Not the case I guess, when consumers have a choice-do I pay $4 for a gallon of gas or for a $4 for a cup of coffee, which I can brew at home or buy it cheaper somewhere else.
Starbucks also admitted what most people were suspecting already --that as brand new stores opened up, they canabalize sales of neighboring Starbuck stores by 20-30%. Rapid cverexpansion (The Starbucks Coffee Bubble) eventually has a price to pay.
The next shoe to drop. As property tax revenues fall due to the housing crisis in the US, watch for schoolboards, cities and state governments to announce massive layoffs in response to a $45 million budget shortfall for fiscal year 2008-2009 which started yesterday July 1, 2008.
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