Starbucks pulls in the reigns


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Starbucks

Starbucks, the US-based operator of coffee shops that has taken the world by storm, seems to have expanded a little too fast. Especially in the United States, they appear to have over-saturated the market by placing Starbucks stores on every available street corner while underestimating the competition. In business, each one of these two mistakes is a cardinal sin, in combination they could be fatal.

Already, Starbucks are forced to close down stores left, right and centre. Their woes cannot be ascribed to the weakening economy only but are also influenced by the emergence of stiff competition, with major players like Subway signalling their intention to enter this market.

It would be easy enough to compile a story about Starbucks’ problems based on reports appearing in the papers and on the Internet but after careful consideration, we decided to proceed differently. Franchise expert Eric Parker is working on a comprehensive document that will trace the company’s meteoric rise, the difficulties it currently encounters and how they attempt to rectify the situation. As soon as the initial report is completed, you’ll find it in the Grapevine section of www.whichfranchise.co.za. We plan to report on subsequent developments in this newsletter as and when they occur.

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