That blasted economic pattern strikes again! It’s almost like raising the operating costs for businesses forces them to compensate by laying off employees, reducing hours, or closing shop.
In Starbucks’ case, it’s the first and third option.
According to Bloomberg, Starbucks CEO Kevin Johnson is going to close 150 stores as the coffee king has taken a hit with declining sales. The first stores on the chopping block are those located in cities where the “fight for 15” crowd has had their victories.
The closing stores are often in “major metro areas where increases in wage and occupancy and other regulatory requirements” are making them unprofitable, Johnson said. “Now, in a lot of ways, it’s middle America and the South that presents an opportunity.”
So urban stores are closing, but as the CEO confirms, Starbucks has plans to open them in the less regulated suburban areas where activists haven’t ruined the job market.
No one should be surprised by this as we see time and again that putting financial pressure on businesses causes them to shrink, and no one is immune, not even major corporations like Starbucks. This also happened to Chipotle in 2015, as well as Red Robin earlier this year. The entire state of Minnesota is watching its economy drop after making minimum wage hikes a state-wide affair.
But in Starbucks’ case, it’s not just minimum wage hikes that caused this decrease in sales that lead to store closures. This is a company that continuously looks down on its own customers, and even sometimes its workers. The #RaceTogether campaign started by Starbucks caused a massive backlash due to the fact that it was not only cringe-worthy to try to force awkward conversations on the populace, it was insulting. It’s insulting because it assumes our society is racist.
As I wrote in 2015 on Starbucks’ supposed “bravery” on trying to force racial conversations on its customers:
But overall, I don’t want companies to be “brave.” If you make coffee, then your job is to serve coffee, not to lecture me about social issues. In an interview, Van Jones said “If we don’t tamp down the backlash against [the] Starbucks ‘Race Together’ campaign, I fear that no major corporation will even try to talk about race again – for maybe 10 or 20 years,” To that end I say, “excellent.” Rich people in boardrooms should keep their personal opinions out of their customers’ lives. Just make me a Venti peppermint mocha with extra whipped cream. Hold the social justice.
Starbucks, you received so much backlash from your customers, not because the subject is a difficult one, because you insulted them. You’re shouting from atop a high horse at people who just want a frappucino, and styling it as bravery. Stop tilting at windmills and just serve the damn coffee.
But not learning their lesson from the #RaceTogether campaign, Starbucks decided to train their workers on “racial bias” after two black men were arrested at a location and escorted away. Once again, Starbucks is insulting the populace as it assumes everyone is racist deep down inside.
So it’s no wonder that people wish to walk away from Starbucks. It’s been calling them racist now for years.
This raises the question as to whether or not Starbucks will do any better branching out to suburban areas where many of these people who don’t take being called racist very well live. While they may find cheaper operating costs, they may also find their customer base lacking. Time will tell, but my advice to Starbucks is to ditch the social justice, left-leaning stances, and do what I’ve been advising it to do for years.
Shut up and serve the damn coffee.