Starbucks closes 61 stores in Australia

[Skyhook]

Starbucks to close 61 Australian outlets | theage.com.au

61 stores to close in Australia of their 85.

600 stores to close in the USA.

Looks like Starbucks has hit a rough patch .

Starbucks in Australia were quoted to say: "As part of the restructuring, Starbucks Australia store development manager Jason Ball will become managing director from September 1."

Maybe Jason Ball can employ experienced barista's with a minimum of 10 years experience from Sept 1, and purchase their coffee from a specialist supplier with more than 40 years coffee experience, instead of just tendering out to the lowest bidder, and using kids behind the counter.

Then maybe they might earn enough respect to stay in business, because they provide a coffee that is worthy of Saint Ali, the patron saint of the cafe/coffee industry.. Passion is what drives pinnacle cafe's, not a fancy brand name, although in Hong Kong the fancy brand name seems to work, but in a city with a pretty hit and miss coffee industry, Starbucks is probably quiet safe... Dai Pai Dong coffee certainly wont threaten them he he.

[aussiegal]

I won't comment on the US arm of the business except to say that not every store you open can and will succeed, especially when you grow as fast as Starbucks has. As for Australia, it has some of the best coffee in the world. Serving the rubbish that Starbucks does was never going to cut it.

I'm sure however the change of government and the reintroduction of government set rates has played a large part in recent events. Wages for people working in these types of businesses are too high. Who wants to pay some 20 year old $36/hour on Sundays for mopping the floor?

It's always amazed me that the US has never gotten it together and figured out how to make a drinkable (and enjoyable) coffee. The slop they serve is enough to put you of drinking coffee forever.

[Skyhook]

So how do all the other cafes that employ a fully experienced Barista survive, aussiegal ?

Nobody else is complaining about the wages, and considering proper proprietor staffed specialist cafes charge 30% less than what Starbucks charge for sub standard coffee, that really says something.

Pellegrini's Espresso bar has been in the same location for over 30 years run by the same family in Bourke Street Melbourne, and they will be there until the 2 old boys kick the bucket. Its where I always make the effort to drop in when we are back in Melbourne, and they have never served me a bad cup.

The coffee industry in Australia, especially in area's of roasting, supply, growing etc is expanding with healthy ytd growth... Nothing to do with the Rudd Govt...Luckily cafe rents are very mild, and well within affordability, that cafe's have a good chance of success, unlike here in HK, which prohibits small business from entering the industry. Those that do, last less than 12 months, which is just a weird concept to me.

Like anything related to hospitality in Australia, if you serve premium F & B, you will generate a loyal patronage, serve muck, and you will be dropped faster than a hot scone.

[talllatte]

I know what you mean about the HK market being brand focused, but their brand has taken a big hit the past year and maybe it's time for landlords (with 1 exception) to reconsider them as anchor tenants.

It's the rent here that is the killer, a few expats or local interested in coffee can't justify a quality place as the meat and drink of the business - the office crowd - are still hung up on chains.

[Crocodile]

The overheads in many of their Australian premises were way over market. A few years ago when they were setting up competing against other expanding coffee franchises, the rents that they were willing to pay to get the market share were extraordinary.

Simple financial sense is now ruling, rather than marketing/sales sense. The stores that they have listed were never able to make money to justify their existence. Sad but true.

[aussiegal]

Nobody else is complaining about the wages, and considering proper proprietor staffed specialist cafes charge 30% less than what Starbucks charge for sub standard coffee, that really says something.

Pellegrini's Espresso bar has been in the same location for over 30 years run by the same family in Bourke Street Melbourne, and they will be there until the 2 old boys kick the bucket. Its where I always make the effort to drop in when we are back in Melbourne, and they have never served me a bad cup.

Skyhook, with all due respect you haven't got a clue what you are talking about. Firstly, as a business owner with an actual shop in Australia that employs real people I can tell you that many businesses are feeling the pinch due to wage rises. You will see that many businesses are closing and most have putting hiring new staff on hold. (do any google search)

Giving an example of a family run business is completely non sensical but clearly you have never run a business yourself so you can't see the grass for the trees. Family run businesses don't have the same overheads as other businesses. It is unlikely that cousin Gino is going to demand to get paid double time on sundays and triple time on public holidays. It's unlikely that when Maria gets pregnant she's going to demand you pay her and keep her position open while she takes a few months off to have her baby. Fabio is not going to take sickies on the company dime because you don't do that when it's your family that foots the bill. And when Giovanni, the cafe owner goes through a rough patch with his business he just doesn't pay himself.

Starbucks ain't run by families, it's run by people who don't give a crap about whether people buy their coffee or not as long as their wages are paid on time. If the company goes through a rough patch nobody is going to volonteer to work for free.

And you just can't compare any small cafe to a multinational. For the most part the cafes in Australia are owned by people who only own the one cafe. They can keep an eye on staff and they live and die by the quality of the barista. Any good barista will be getting more than the minimum wage (paid in starbucks no matter what position you have). I know of barista's pulling in 80-100k a year. Not bad for someone without a degree but completely reflective of how important they are to the cafe.

And as for saying that cafes have cheap rents, they don't get a reduction because they are a cafe, they pay market rates. The landlord will rent the space to the business that pays the most. Commercial rent in austalia is expensive wherever you go so only the best operators survive.

It's always funny when an outsider comments so definitively on another country's economic landscape feeling they know it all just because they've been there on holiday.

[Skyhook]

It's always funny when an outsider comments so definitively on another country's economic landscape feeling they know it all just because they've been there on holiday.

Nice one there Aussiegal.

I was born in Melbourne, and lived there most of my life, and was fortunate enough to have developed a good friendship with Bernard Goston, who is highly respected in Australia's coffee industry. He is one of the people I admire the most, with all things coffee related.


I have actually owned 2 separate companies in Melbourne, and during my studies, I even spent time working in cafe's in Lygon Street Carlton when I was a young bloke. I know the industry well enough.


I am fully aware of what the commercial rents are in Melbourne, albeit a bit over 10 years ago now. A previous ex partner of mine is paying $4500 a month AUS to rent her 50 seat cafe premises in Drummond Street Carlton, and she is doing quiet well 3 years on. We can agree to disagree on this topic.

I am no tourist, that's for sure, I find it fascinating that even my Geo avatar which includes the State flag of Victoria, was left unnoticed.

Oh, well .

[aussiegal]

Then how do you explain all the nonsense you wrote?

[PDLM]

Eh? Minimum 10-years experience as a barista? Come on - if you can't learn how to make a cup of coffee in a month then you aren't going to learn in 10 years.

[Skyhook]

In Roma the minimum Barista apprenticeship is 4 years. Before you can even earn the Barista title.

Paul Bassett ( Aussie born Maltese ) who won the world Barista championships, did his 4 years in Italy, and he is one of the worlds best.

I am sorry to say, but you are wrong PDLM.

Aussiegal, mi hai rotto i coglioni, cheechalina

And thanks for your comments Talllatte and Crocodile.