On today’s show we are talking about a service business that used to be on top of its segment in the market.
The company we’re talking about is Starbucks.
So it’s no surprise to me that today Starbucks CEO Brian Niccol announced a major drop in both earnings and revenue. They also suspended financial guidance for the upcoming quarters.
Once a brand loses loyalty to the brand, it’s hard to get it back. Same store sales are down 6%. Attempts to win back customers with various promotions have failed.
Starbucks, like many other premium retail locations is often connected to prime real estate. I predict that the averages obscure the extremities. Some locations will continue to perform very strongly. Still others will dramatically underperform. Unless the turnaround happens quickly, some of these poorly performing locations will close.
If Starbucks saw enough good data in the metrics to open a location, then chances are good that the location is still good, even though Starbucks revenue has fallen at that location and that location is now losing money and will close. The problem is not the location, but rather that Starbucks lost its way and alienated its customers.
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