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November 10, 2008

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CD

Say What?!?

Schultz says: "we are encouraged by our ability to drive increased traffic at a relatively low cost, as we did on Election Day."

Translation: Wow, if you give away free product people will come to your stores to get that free product.

Investor's question: Did you translate the increased traffic into sales?

mnijph

Given that revenue was up, I believe the answer to your questions is yes.

Naptown Barista

Long a bone of contention, "Total lease exit costs are now expected to be up to $170 million.". Gee, what a great return on your investment. Paying $170 million to SAVE money? Can anyone logically think that the closed (or soon to be) stores would have lost MORE than that over the terms of their leases? Rather than buying stock in Starbucks, an investor would be better off buying shares in real estate holding companies aligned with this company. This is leadership? Fiscal stewardship? Onward!

Naptown Barista

"Schultz says: "we are encouraged by our ability to drive increased traffic at a relatively low cost, as we did on Election Day."

Yet ANOTHER translation..."That $2.00 cup of coffee really costs almost nothing...but we're still gonna charge $2 bucks for it."

ManagerWhoLeft

Two words: Sinking ship.

According to CNBC, SBUX profits were down 97% Year over Year for Q4

I think Howard has a canchor sore. Ive never heard him stumble on so many words before.

K-Dog

Why didn't I get out at $40? Why didn't I get out at $27? $17? $13? Someone please take this company over and put me out of my misery! (And is it me, or does Howard not know how to pronounce Mastrena?)

JJ

We are a sinking ship... we're losing the image and image was our product.

The image of baristas as real people who care about their customers is slipping fast.

The image of Starbucks as a third place is slipping fast... we're closer to McDonald's than we are to a non-corporate coffeehouse.

Howard is going to have to step down... the stockholders won't stand for this. And as impotent and backwards as he's been since his return, the company is dead when he leaves. The wolves will move in and salvage whatever they can to protect the bottom line.

We'll be a Pizza Hut with green aprons.

Get out while you can...

K-Dog

Rearchitected? Is that where you tear down everything that made a building great and unique and replace it cheap new construction that looks like everything else on the block?

K-Dog

Replace it WITH cheap new construction, that is :-)

Pat Nerr

whoa! Down in traffic and year over year sales... didn't see that coming...

I miss Peter B's voice... even though I only heard it 3 times

JJ

How did this happen? I thought Frappucino Excellence re-training was going to put us back over-the-top!

Me

Did I miss something? While a lot of other companies go into bankruptcy protection (e.g. circuit city just today) or actually loose money starbucks is still earning some. Yes, I know it used to be more. And yes, a stock at around 10 Dollars is only good for someone who just starts to buy in. I don't even agree with a lot of decisions made by our leadership, BUT bottom line is, Starbucks still earns money. I think this is quite an achievement, considering everyone talking the company dead.

You

@me, the problem is that results are historical in nature while a stock price is a proxy for future cash flows. The trend line on SBUX is not good, this stock has a long way to go. When McDonald's is outperforming you in your core market, you know you have a serious problem.

SBUX Guy

Just to keep this in perspective, it was an 8% drop in US same store sales. The headlines makes it sound as if a lot more customers left.

Me

I know the trend is not a good one. I just still refuse to look at the Q4 results and get into panic. As long as Starbucks pays its bills and at the end there is still a little something left in the treasure box, it looks good to me. I'm not a shareholder. I do understand shareholders have a different point of view. But I think the shareholder point of view (to be as profitable as humanly possible, no matter the long term effect on this) can destroy a company or at least make it difficult for the company's leaders to make the right long term decisions.

I don't know why so many companies cater more to their shareholders than their customers.
I don't know why in this world every single action has to have an immediate ROI. It makes me sick when companies earn money and the shareholders scream: "You suck! We expected more!"
This whole world is too much shareholder oriented.
And before you start taking me apart, I do know shareholders can be very good for a company (see starbucks initial expansion which wouldn't have been possible without them). Often they might be. But quite often they are not.

@ Me -

Thats interesting you mention about how shareholders can actually expect so much that it forces a company to make decisions that may make a lot of short term profit, but take away from long term growth.

To support your point, that is precisely why Warren Buffet refuses to split the price of Berkshire Hathaway from its $100,000+ per share price. He says he doesnt just want anyone investing in his company.

espresso=love

This is so discouraging :(
I have a question: does anyone think they'll be closing more stores? (This is the last thing I'd want to happen because I simply love Starbucks, but we have to be realistic...)

Melody

I'm listening to a reply of the web-cast. Howard does sound a bit like he's just come from the dentist ...

On a separate topic, I tried to find out from some of my favorite stores their tip rates ... one store says they average about $2.40 an hour, and the other says they average about $1.50 an hour. It seems like the larger stores have some disadvantage because there are more partners to share with.

truth

But LOOK over there....GOLD cards!


Mmmmmmm. Shiny...

Melody

Oops ... sorry somehow I thought I was in the open thread.

e.b

Well, from truth and everyone else who forecasted this:

There's your proof. This company is dying and cannot live on its own. Until some large conglomerate comes in to do a takeover and actually turn this company into the fast food restaurant it wants to be so dearly, it will continue to falter.

We're 20c away from $10. That says it all. The Q4 numbers are just icing on the really bad tasting cake.

Deadtiredinla

What happens to all those partners? Partners who have been with the company well, since, say 2000? As a former five and half year manager, I know for a fact that those people are up the creek without a paddle. I sold all of my options in Jan of 05. I made close to 20 grand when the stock was around 60 a share. Later that year it split, and it's been down hill from there. I know for a fact that the majority of their options are now worth spit if they haven't excised any of them since 2005. I worked from 1999 thru 2005 and with the exception of one year, all of my options were over 10 dollars a share. That means that all of that stock is worth NOTHING! Shame on you Howard, and all of your hypocritical friends. Onward!

Kilroy

The baristas drive SBUX, good people attract other good people and made a SBUX store a desirable place for customers to visit--for the most part this is still the case.Several years ago my partner and I were hired as contractors and after discussions we were asked if there was a way to quantify what was happening in the stores,put it on a disk and pass it on.Wow! Fine wine is not a commodity,the SBUX experience can't be captured on a disk or in a book.The culture at the SSC has to change,the prior CEO was a bankruptcy specialist from retail groceries on Long Island.The corporate culture at HQ hasn't changed; its more like PathMart than Whole Foods.Most of the people in the stores are still inspired but something drastic needs to change at the top; maybe greater autonomy at the store level where basistas and customers interact.the problem is that in our current economic state things can change overnight and usually not for the good.

Wholahay

OMG....the ship is sinking! The Ship is sinking!!!!!

Has anyone read a newspaper lately. The whole economy is in the dump. Do you really think that Starbucks is immune to this? The only reason our stock is in teh dumps is because of knee-jerk, short-sighted investors...I'd rather not have these cowards owning any part of our company to begin with. Stop being so freaking pessimistic and reactive. Just chill out for christs sake. This whole situation is just feeding on iteself anymore.

Melody

Totally interesting listening to Howard talking about PR/marketing/advertising vis a vis the Election Day tall free drip coffee. He is right that it took one advertisement on t.v. and that the "blogsphere" (did I hear him say that right?) and "culture footprint" moved the message. (That's me largely paraphrasing Howard).

It is amazing how Starbucks creates a cultural buzz without "we'll make it your way" advertising.

STARBUCKS GOSSIP WEBMASTER

Here is an Advertising Age story from today about Starbucks getting free publicity for its Election Day promotion.

Pat Nerr

I have to agree that it is a bit presumptuous that Starbucks will "go out of business" anytime in the near future. They'll survive... people will come and go... promotional offers and gimmicks will appear and fade. My only beef is that a truly amazing company that could have been positioned well in these times has been run into the $hi++er by it's Leadership. Doing things that took it way off track and away from the thing that made it great. I blame Howie 100%... he knew... he called it out but did nothing but give "talks"... well, the piper has come for his payment and "talks" aren't worth squat. You reap what you sow Howie... you reap what you sow. And look at your company now. Time for you to give up the ship and let someone else turn it into a Denny's

Big Green Monkey

As for tips, My store, when I started, was $2.85 an hour, with my store partners telling me it used to be above even that, upwards of $3.50. Now a days, $2.50 is seen as "a good week". Tips were down to about $2, but have bounced back a bit since.

I know my store is profitable, mostly because we are a group of amazing baristas, who work hard, and keep our labor hours down. That means less partners, sure, but it means the store stays open, it means there's less faces for customers to remember, which then means higher tips. While the company may have concerns, my store will be good. The best we can all due is to ensure that all of our stores are "good". I take pride in my cafe, and I think that's the basis of any good store.

What's really crazy is that our profit margin was only about 2x that of Peets...and Peet's has less than 500 stores (that's including licensed locations). By comparison, we have what- 10,000 (nationally, including licensed)?

That is pretty scary that we have that many people in position who don't know how to control costs.

Mike

Our Partner View Survey results were announced today. Were the results surprising? Not in the least. Melody was talking about this before she went on her visit -- the disconnect in general isn't at the store level. The disconnect is from the store level to the senior executives...most notably in the areas of honest and timely communications, growth and development opportunities, and pay. As a store manager I've fought like hell to keep my team happy and motivated and it's nice to see it recognized. It's also kind of satisfying to see our baristas and shift supervisors prove yet again even though they're treated and paid like second-rate citizens, they're anything but.

Venti Urnex Latte

Here are three good ways for Starbucks to improve its finances:

-- Give away drip coffee for free to those who bring their own cup. If a cup of coffee costs the company 30 cents, 20 cents of that is in cup/lid/sleeve. This would drive traffic to the store, giving people incentive to buy other items, and would cost Starbucks virtually nothing. It would also boost the reputation for being a 'green' company.

-- Charge for bathroom use. Labor maintaining the bathrooms, toilet paper, soap, etc. is a huge cost. Even a nickel or dime would make a big difference. In New York, I think Mayor Bloomberg said a few years ago that the city didn't need public bathrooms because it had so many Starbucks. If that's the case, the city should be subsidizing Starbucks for providing free public facilities. On weekends, our store's bathroom has a line out the door all day long. It acts as the public bathroom for the entire neighborhood.

-- Get a new kind of napkin that doesn't encourage waste. People take huge handfuls of napkins, which they don't use. Probably 20 percent of the napkins are thrown in the trash unused. We need the kind of napkin on a roll with a perforation or some other technique that feeds the napkins out one at a time.

crybaby sally

Im a 14 year partner and I face a layoff on Friday. I never thought this would happen to me,to my fellow partners,to my Starbucks Coffe Co that I love so much. I work at the Kent Roasting Plant and I've had the best experience of my life with this company. Unfortunately 65 jobs will be cut and my job is impacted. Im not ready to leave, this was my first job. I was a young 23 year old who was amazed at how this company treated it's partners. I bought my first vehicle and my very own home working for Starbucks. Whatever happens on friday, I will always have great memories of what used to be! I enjoyed my stock (when it was work something)and my beanstock too! Wish me luck! Thank You Howard for the Starbucks Experience! ~Onward~

BOSTON STARBUCKS REBEL

As any of know, Starbucks is not immune to the economy, nor is any company for that matter. The collapse of the global markets due to the credit crisis was bound to have an impact. Macroeconomic conditions just have an effect. Kramer on CNBC was right that Starbucks stock was widely overpriced.

All good things must come to an end. Uncle Howie speaks about Starbucks being in chapters of a book. It appears that we are having some trouble. I think when the ship starts to rock and it seems to be sinking. All hands man your stations. Improvise, adapt and overcome.

To all the partners in the stores and non-retail positions, what you do everyday has an effect. It is up to you what effect you will have.

Starbucks has done many great things and we will overcome once again. Starbucks will rise again!

BOSTON STARBUCKS REBEL
PRIMUS INTER PARES
STARBUCKS REBEL ALLIANCE

Tut85

Tips at my store aren't much more than $0.50 an hour, sometimes lower. Its a good week if I get more than $10.

SSC Hasbeen

As long as you believe in what "Mr. Humanity" says, you are believing in a PR line of B.S. designed to keep you working and sacrificing and smiling and believing that Starbucks is a better place to work than any other place.

Please do yourselves a favor.

Believe in yourself.
Believe in your store.
Believe in your partners in the store.
Believe in your partners at the plants.
Believe in the support partners at SSC.
Believe in the Green Apron.
Believe in the Guiding Principles.

Just stop believing in "Mr. Humanity". He's made enough money off your passion and willingness to sacrifice. And please understand, for there are people on this board who have witnessed this with their own eyes. "Mr. Humanity" does NOT believe in you. He only believes in himself -- and the absolute conviction that he is right and everyone else is wrong. And that is what he is out to prove.


inopethflames

i didnt read all the comments, but has anyone noticed there was a huge financial crisis about 3-4 weeks ago & that 99% of all companies stocks are way down right now? starbucks still made a profit & had a huge amount of revenue. probably a year from now they will have profits close to where they were last year or at least much greater than this 4th quarter. the financial crisis is hopefully over & will begin to come back now and over the next year. this is why you hold stocks for long term because eventually they will come back. i would think that if starbucks is or will do a lot of overseas expansion that this would be a great time to buy their stocks if theyre way down. i dont own any so i dont pay attention to them. if you owned em when they were $40 u shoulda sold em then and rebought now for 4x the amount.

Charlie

I was a loyal Starbucks customer but not anymore. Has anyone else noticed that since Starbucks started the Italian cappucino introduction to America, a lot of small independent coffee shops have caught up and surpassed. No, they usually don't serve as large a cup of watered down latte, but the latte tastes better. Baristas have also lost that friendly know your name attitude at all my local Starbucks. I feel like I'm being served at a 7-Eleven.

When people start crying the sky is falling with the economy you know everyone will cut back. 3 visits a day down to 1 visit and sometimes no visits to Starbucks. If the CEO starts telling you it's ok, beware, that's his financial engineers talking.

BILL

Believe in yourself.
Believe in your store.
Believe in your partners in the store.
Believe in your partners at the plants.
Believe in the support partners at SSC.
Believe in the Green Apron.
Believe in the Guiding Principles
Believe in Santa Claus
Believe in the Easter Bunny
Believe in Unicorns
Believe in the Tooth Fairy.

When do we get our red holiday shirts?

az_sbux

Howard, two words.

Dollar menu.

It has saved McD, Wendys, Burger King, and The Dollar Store.

Maybe it can work SBUX. Nothing else seems to be working. You can't go upscale in a down economy.

Think about it.

akmoyer

former employee, still a stock holder here.
Did the company do away with the fantastic 6 day training sessions? That would be a shame.
Does anyone agree we me that the ever expanding blended drink menu makes working there a drag and takes the company away from its roots?
Everything sounds like panic but the store does need it unique barista experiences to survive.. the drug pusher needs to be entertaining... should I come back?

nematode

I am a recently new barista and have a few things to say. My store has a new manager who was brought on and seemed cool. Now the baristas and shifts all have horrible moral. I myself have never been certified his paperwork in the back is stack up from june he hired his friend and now people feel favortism going on, texting all through his shift, his paper order has us always running out. his scheduling has 2 people on saturdays . I feel like i can never catch up on those days,between cleaning making prep I can't even possibly connect.thought about bringing these things up to the dm but It may seem he's from the same cloth. He was doing an interview in our lobby with a girl who was wanting to be a shift, after I asked her how it went she was all irratated saying the dm was texting the whole time during the interview.. Could these be reasons sbux is going down too.....

bigredbarista

we arent getting red holiday shirts this year, we are getting (red) aprons to go along with our (red) promotion.

as for this thread... i wish everyone would cool their jets. we are still making a profit. things will get better. you just cant focus on the negative aspects!!

Counter Bean

Starbucks is done, at least as it has existed to date. It isn't so much the economy, at least not alone. That does not explain why McDOnalds and DUnkin' Donuts coffee sales are surging while Starbucks is down 97%. People are going out for coffee. They just are not going to Starbucks any more.

It was a fad, and fads fade away. Starbucks sems to me like a mix between The Sharper Image and Krispy Kreme. THe Sharper Image was a big splash of a fad in the late 80s/early90s and kids thought it was really cool to work there. It was the most crowded shop in any mall.

Krispy Kreme believed its own press hype and falsely inflated stock price. All of the reporters fell all over themsleves writing about the doughnuts. KK made the mistake of confusing customer sentiment with a profit and loss statement. How many doughnuts did those reporters buy every week? After week one, it was zero. Same for everyone else, too.

Both Sharper Image and Krispy Kreme believed their own hype and epxanded to try to be everywhere, even going so far as to have multiple locations in the same town. People were very excited to have one in their area.....for a few years. Then they just got tired of going there. Those were a lot of empty stores to heat, cool, staff and rent.

Sound familiar?

Really?

Here's the thing . . . we lost money in Q3 (blamed on the costs of breaking leases and closing stores). So I take it as good news that we actually made some money in Q4. Sure, it's not as much as everyone (ok, or at least the shareholders and analysts) might like, but its a move in a positive direction. If we implement well and re-ignite the passion and human connection talked about in New Orleans, we can (and will) see profits and stock price increase once again. I personally don't see us going under or being bought out anytime soon.

Bladerunner

Left in April. Sold my stock, and cleared out my 401k. Saw this coming. But I worked on the trading floor of the CBOE for 8 years in the 80's and early 90's. Will Starbucks survive? I believe it will. But a value type menu is really, really needed. And more stores need to be closed, sadly. The market has not yet reached bottom. About 6500, Starbucks at 7$, will be a good buy. Maybe.

sassy

Um...did everybody forget in only three months that last quarter we posted a quarterly LOSS for the first time in, well - ever? So hell, any profit is better than nothing. The economy is crap right now, the only company in the retail/service sector that seems to be gaining in same store sales is Walmart. I don't know about you, but I sure as heck don't want to work there.

So just keep your head up, your wits about you, that smile pasted on your face, because those smiling baristas are why they come back. In my neighborhood we have 7 competing coffee shops (including another SBux) withing a ten block radius, prices pretty comparable. And our customers say they always come back to us because we are the NICEST most CARING baristas - not cause it's SBux. So if you want to be a naysayer that's fine, jump off the "sinking ship" as you call it, because the company doesn't want someone negative like you around for the next ten years or whatever anyways.

Until then I'll just hang onto my underwater stock and cross my fingers.

"Could these be reasons sbux is going down too....."

YES!!!!!!!!!!!!

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