Starbucks Competes Aggressively as Competition Dwindles

April 12, 2011 Updated: October 1, 2015

COMPETITOR: Starbucks Center, headquarters for the international coffee and coffeehouse chain, is seen last March in Seattle, Washington. Starbucks is still competing aggressively worldwide as it turns 40. (Mark Ralston/AFP/Getty Images)
COMPETITOR: Starbucks Center, headquarters for the international coffee and coffeehouse chain, is seen last March in Seattle, Washington. Starbucks is still competing aggressively worldwide as it turns 40. (Mark Ralston/AFP/Getty Images)
Starbucks Coffee Co. turned 40 years on March 30, the age when a majority of people begin to experience a midlife crisis, associated with depression, boredom, frustration, and at times, a total turnover of one’s lifestyle and outlook.

The midlife crisis “was first identified by the psychologist Carl Jung and is a normal part of the maturing process. Most people will experience some form of emotional transition during that time of life,” according to the About.com website.

Starbucks has become a household name for many coffee drinkers over the years, whether they drink the brew at home or in one of the many Starbucks coffee shops. Starbucks groupies love the coffee, the atmosphere in the Starbucks shops, and have become addicted to whatever is offered by Starbucks.

“Sheer size and Starbuck’s number of locations has something to do with name recognition and popularity. With over 16,000 shops worldwide, Starbucks is certainly one of the most visible brands in the world,” according to the Food Editorials.com website in an undated article.

Surviving Adversity

“There are limits to growth,” said John Quelch, professor at Harvard Business School, discussing Starbucks in a 2008 article posted on the Harvard Business Review website.

Starbucks grew too fast and went public instead of staying private. “To continue to be a premium-priced brand while trading as a public company is very challenging,” Quelch said.

Within 24 years, Starbucks had grown from a company with only 11 stores and 100 employees to a giant with 17,009 stores. At the beginning of 2011, Starbucks had 11,158 stores in the United States and 5,851 in foreign countries, increasing total stores by 98.5 percent since 2004. Revenue soared from $5.3 billion in 2004 to $10.7 billion in 2010, more than doubling during those five years.

In 2006, before the recession, Starbucks experienced a slump, with customers moving on to competition, such as McDonald’s and Dunkin’ Donuts. At the same time, the company faced internal management problems.

“Starbucks business is highly sensitive to increases and decreases in customer traffic,” said Starbucks in its 2008 annual report.

Starbucks stock offering was at $20.47 in 2007. By the end of 2008, the stock price had dropped to $9.44. Highlighting the staying power of Starbucks, by April 2011, the stock price had increased to $36.73, a more than 285 percent increase over the 2008 stock price.

The drop in the company’s 2008 stock price of close to 54 percent resulted in the closure of around 600 U.S. stores and 61 Australian stores, according to the 2008 annual report. At the same time, about 1,000 positions were eliminated or not filled.

To justify its actions, Starbucks stated in its 2008 annual report that it “continued to experience declining comparable store sales in its US stores, primarily due to lower customer traffic. … The impact of this decline on the Company’s financial results for fiscal 2008 was significant.”

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