by Marion Nestle
Jan 8 2008

Starbucks in trouble?

Here is an example of how crazy our food system is.  Starbucks, according to the Chicago Tribune, is in trouble.  Why?  “while overall revenue and earnings continued to increase at rates better than 20 percent in its fiscal 2007 fourth quarter [which sounds pretty good to me]…there was a 1 percent slip in average transactions per store in the United States [oops].”  That’s all it takes for Wall Street to start predicting doom, apparently.

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  • “Shares were down more than 40 percent last year.”
    As soon as Starbucks became SBUX, the business model changed from slinging coffee-flavored milk to increasing the value of its shares. They’ve already taken the first step in rectifying the slump in stock prices by bringing back Schultz.
    Now Wall Street just has to decide whether or not the fall has been due to the higher price of gas or the lack of focus with the expansion into music, books and movies.
    I dunno, maybe they should just stop burning the coffee.

  • Eric

    Marion-
    What’s hasn’t been mentioned yet is that arrival of McDonald’s into the coffee market. As McD’s now adds “gourmet” coffee to all of its thousands of restaurants at a lower price than Starbucks, it threatens Starbucks’ market share.

    The steep price of Starbucks drinks hurts demand. And they could set a lower price if milk wasn’t so expensive. Milk prices are high because of the skyrocketing costs of cornfeed for cows. And cornfeed is high because of the increased demand for ethanol…

    See it all comes back to King Corn!

  • Saara: “I dunno, maybe they should just stop burning the coffee.” LOL – I’m glad I’m not the only person who thinks their coffee is undrinkable. My personal theory is that they overroast it because that removes the volatile oils that make fresh coffee taste really good and stale coffee taste really bad. If you get rid of those oils, coffee has a very long shelf life. And as far as I’m concerned, that’s where it can stay – on the shelf.

    I don’t like Starbucks much for other reasons, too – they are purveyors of dessert masquerading as coffee. And their baked goods are way too sweet, sweeter even than other mass-produced pastries. And … this is unbelievable to me, but … even their egg salad has sugar in it!

  • Nice blog! anyways I don’t like star bucks because who needs expensive coffee when you can get it real cheap at pancake house?

    I dont like the taste and honestly Iam glad is going down.