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COLUMNISTS
TODAY'S STORIES
03.07.2008
As Goes Starbucks...

The decline of the economy continues apace, and one of the indices is that fact that Starbuck's is shutting down nearly 10% of its coffee 
shops. This means about 600 locations. Of course, there are good and  sufficient bottom line reasons for this move. These cafes were not 
making enough money and probably losing more money than some of the profitable ones make. Starbucks tried to gobble up the entire market 
in a long but probably absent-minded fit of expansion. There are now, if I am remembering correctly, six of them just in and around Harvard  Square.

The first Starbucks in the Square replaced a cafe called the Coffee Connection, where I held my individual tutorials and met with students 
for appointments. Its pace was a bit slower and both its coffee and cakes were much better. Alas, gone.

There are still at least two other coffee shops where the brew has always been a big improvement over the ones at fast food Starbucks.  
One is Peet's, which is also a chain but without the ambition to remake the entire country's pace of drinking. The other is Finale, a small local network with pastry you can die from...and probably will.

Any shutdown of 10% of a big chain expresses a grim reality in the economy. And it also means disaster for individuals and their  families, even though Starbuck's wages were  probably at the minimum wage or just above it. In any case, 12,000 employees have been laid  off.

Update: A commenter writes:

Coffee Connection was owned by George Howell, who sold his shops to Starbucks. He spent the next 7 years or so developing relationships with individual
growers around the world, and now has a roasting outfit in the Boston area (Terroir).  Unlike Starbucks and Peet's, which tend to over-roast, Howell's coffee is light-roasted so that the unique flavor of each bean is not lost. He's become sort of an icon in the specialty coffee movement.  Crema -- which isa fantastic cafe that just opened in the Square -- serves George Howell products.

 

Posted: Thursday, July 03, 2008 12:10 PM with 19 comment(s)

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CRS9TNR said:

It's kind of funny what catches the attention of Washington D.C.

Starbucks closes a few of it's ubiquitous coffee shops and it stirs up memories and is noted.

General Motors is failing, badly, and doesn't merit a mention.  In the last few weeks Domestic Automakers have announced multiple plant closures, probably close to 20,000 direct layoffs, and twice that in supporting industry and nieghboring businesses.

The Market Meltdown of General Motors, along with a large share of the DJIA is pretty stunning.

Nice to know that Marty has better places to get coffee than Starbucks.  Who needs those losers anyway.  His Prius let's everyone know how smart he is and how far ahead of the curve he is.

Truly a Latte Liberal if ever there was one.

July 3, 2008 1:36 PM

apassy said:

Starbuck may have paid close to minimum wage, but they provided health coverage for employees, even part-timers.  That's more that you can say for alot of companies, probably including any that might come in their wake.

BTW - to crs9tnr:

Domestic automakers failing doesn't merit a mention because it's not news.   They can't seem to make a product the market really wants, their quality is terrible, but all of that is NOT NEWS.  Starbucks is a company that appeared to "have it all right."  A change from that IS NEWS.

July 3, 2008 2:11 PM

jwl2672 said:

Of all the writers on TNR you could have labeled with "latte-liberal", you picked the wrong one.  You probably had a 99% probability of choosing a latte-liberal but Marty ain't it.

July 3, 2008 3:44 PM

thejauntyboulevardier said:

Starbucks pays their entry employees about $10 an hour, at least here in CA.

And I love Starbucks. I really hate those independent coffee shops with the tattoo-ed slacker employees who might, I say might, take a break from chatting with their friends to make you a drink, and then, when asked to wipe the three days accumulated crud off their chipped tables, roll their eyes and take five minutes to do so.

Starbucks is clean, they know my name, they offer a quality cup of coffee - Peets is better I admit - and they have a professional chain of command, is, as I approach 50, more to my taste. When I go to those independent places with said employees, I always want to give them a kick in the ass and tell them to clean the place up and stop talking on their cell phones.

I am now an old fogey.

July 3, 2008 3:48 PM

williamyard said:

I agree with MP: Peets is a big step up from Starbucks.

My beef is not so much with Starbucks' brew as with what they've done to coffee culture. Coffee "to go" was once a rarity--if you went to a "coffeehouse," you got your coffee in a ceramic cup or mug, and you sat at a table there, and you drank it. And maybe you read the paper. Or wrote. Or played chess with an old retired guy. Or argued politics with that silly know-it-all from the bookstore who takes Tuesdays off.

Once, sitting around for a while was okay. Once, striking up a conversation with a complete stranger was okay. Once, allowing serendipity and the social contract to manage the doings in a public place was okay. You did not share a blog with someone you could not see; rather, you shared a table with someone whose eyes you could look into, to tell if they were lying, or sad, or burning with ambition.

The Starbucks business model--high-volume sales to people who leave the premises within seconds of receiving the product--changed all that. Now except in rare occasions we get our coffee in disposable cardboard cups that cannot hold a candle to the feel of china against our lips. Now we hardly make eye contact with the other patrons, let alone talk with them. We are now so accustomed to not talking to strangers that the occasional two people who do stick around might sit at adjacent tables at the same time, inches from each other, and write on their blogs to themselves about themselves and only themselves. So much for public discourse.

Give me coffeehouses with graffiti-covered old wooden tables crammed against each other and the owner with a stained towel thrown over his shoulder and "A Love Supreme" careering from an old speaker nailed precariously above the unisex bathroom's door and somebody's dog, in violation of five separate health codes, scratching himself next to a pile of old newspapers and a tackboard covering one wall with notes for roommates and housecleaners and lectures by crackpot conspiracy theorists and a slightly saggy middle-aged redhead in faded jeans and the crow's feet of a life well lived framing her freezing blue eyes that look up from her battered copy of Achebe's "Things Fall Apart" to discover that, a few feet away, I happen to be reading the same book and have just then glanced up to take a long look at her.

July 3, 2008 6:18 PM

perseus353 said:

Does Harvard Square still have Pete's Coffee and Tea?   They're not bad.

July 3, 2008 6:38 PM

ironyroad said:

If there would be even a slim chance of getting a citizen's right to indolence enshrined in law, I'd be for whichever political candidate might risk running on that.

But given that even a couple of weeks annual paid vacation time is now merely of historical or even anthropological interest (after fighting for it for much of the 19th and early 20th centuries) for many in this workaholic American culture, I don't hold out much hope.

Perhaps the larger cultural framework in which one worked to live rather than lived to work has vanished too, rather like the notion that regulation was needed to temper the worst aspects of capitalism and to ensure that major components of national infrastructure functioned in the public interest.

How quaint, now that I think about it.

July 3, 2008 9:17 PM

thejauntyboulevardier said:

bill,

hee, hee, let us agree to disagree. My favorite caffes in the entire world are Caffe Greco, then Caffe Treiste, both in North Beach. Greco is more aligned to my tastes, Treiste to yours.

But I have to tell you, in Petaluma, where I live, the local cafe, since closed, was a place that when I would go in, I would be in a good mood, but upon leaving, I was always sour. I go to the neighborhood Starbucks, near a hilariously named Chinese restaurant called "Thang Long", and they know me, I run into all the local folks, and my wife and I go every weekend to catch up and relax.

July 4, 2008 11:11 AM

CRS9TNR said:

Apassy,

By your logic we shouldn't cover anything that isn't NEWS.  Ignore Palestinian Terrorism against Israel because that's been going on for 20 years.  Inner City Crime, been there, done that.

My point is still valid, the News reported about Plant Closures with many families losing their jobs.  General Motors stock market value is half of Starbucks.  This is news and hits a lof of people in the midwest hard.  And it it not noted by TNR.

Shutter a Coffeeshop in Georgetown and Marty suddenly feels and empathy for the 12,000 part time Baristas.  He waxes poetic about student trysts and gourmet coffee.  I guess this recession is starting to hit home.

JW12572 - Marty is a little to the right of most of the Liberati, but his Man Crush on Obama is enough to qualify as a Latte Liberal in my judgement.  Close call and I am open if you have a better description.

July 4, 2008 4:05 PM

thejauntyboulevardier said:

I am a proud latte liberal...and I am a mocha liberal too.  People who don't like it can bite me...

if marty is a latte liberal, then that is one more point in his favor in my book...

July 4, 2008 4:29 PM

arock1978 said:

Please don't grant any legitimacy to the term "latte liberal."  It's garbage and readers of TNR ought to know better.

July 4, 2008 7:52 PM

teplukhin2you said:

The Times was on target. SBUX tried to please shareholders by touting progress against their self-proclaimed key success indicator of new store openings, which led them in the last few years to make lots of really bad real estate decisions. These closings are merely undoing that error.

July 5, 2008 4:23 AM

fseidle said:

The failure to mention GM in a article about Starbucks closing 600 under performing shops.is completely

legit.

Gm is once again caught flat footed,as it was during the crunch in the 70's.

Feeling bad about anyone who loses his or her job however is appropriate.

So while some former GM employees and former Starbucks employees may find themselves applying for the same jobs and the bargain basement wages they pay,come november they can vote for Obama.

July 5, 2008 8:23 AM

dalefogden said:

As a student of politics (and always a student) with strong anarchist leanings (as some of my teachers observed even in grade school), I realized long ago that everything is done to excess. The government has lived on credit for decades and, even when we had a budget "surplus" the national debt grew due to government accounting chicanery. The masses eventually succumbed to the belief that they could live on credit as well; they just had to believe that their houses always would bail them out, even when they have negative amortization loans. No longer do we need to work to earn money to be able to buy things. We just buy them on credit and play cash flow games. Note how many times we hear commercials about how your "Credit Rating is Everything" without disclaimers about ever paying money you owe. So people continued to buy things they don't need with money they don't have and, for the most part, will never be able to pay.

Government wanted lenders to give money to people to buy houses (or lattes at Starbucks) who couldn't afford them and extorted them with regulations until they did so. The wizards of Wall Street figured they could dump the risks on "naive" investors and make huge fees (which they did). As always, the day of reckoning arrived and the Ponzi scheme  fell apart.

Fortunately, our financial system has a place for contrarians. We sell short; we buy and sell options. With ETF's we can even short the Federal Reserve, the most harmful agency ever created. After income taxes, I have more than doubled my personal wealth (which already was in the low seven figures from 40 years of working and saving) by betting against the US Government and Wall Street. In particular, I made almost $50,000 shorting Starbucks. I waited several years, watching SBUX, know that eventually, it would be a terrific short. On October 31, 2007, SBUX was selling for $26.68 and in July 3, it closed at $15.56 and is still overvalued. As people pay $5-6.00 for gas (with its relatively inelastic demand, at least in the short run) they will no longer pay outrageous prices for lousy burnt coffee.

Personally, I buy Dunkin Donuts' bean over the internet. MUCH better.

July 5, 2008 7:18 PM

rrebeccac said:

It's unfortunate that you did not mention the internal changes in the company which shed light on the move to shut down some of its stores: former Chairman Howard Schultz's return to Starbucks. Schultz plans to refocus the company on regular ole coffee and the cafe experience and away from the retail merchandise and cross-marketing (i.e. music).  The elimination of some stores seems to have more to do with this revision of the company's business model than economic woes per se.  

To dub Starbucks "fast food" is to misunderstand the entire premise of the place.  Starbucks' model IS the independent coffee shop, with its comfortable, inviting ambience, familiar staff, and encouragement to linger.  The "chain store" element Starbucks embraces, and which as some other posters mentioned is often missing at the independent coffee shop, is the focus on reliable quality of  product and service.  You may prefer other brands of coffee (as I myself do), but you can be confident that at any Starbucks you go to the coffee will be fresh, properly prepared, and served professionally. You usually cannot count on that at independent cafes. Though the exceptions are some of my favorite places to go, I have been too many cafes that give "independence" a bad name: the steam wands are caked with burned milk, the cafe area filthy, and the staff members would obviously rather be outside smoking cigarettes.  

Also, the wages are higher than minimum and the health benefits generous--and for part-time workers to boot. Because of this, there is a much lower rate of turnover among the employees than at other coffeeshops and restaurants.

July 5, 2008 10:27 PM

thejauntyboulevardier said:

rrebeccac,

Bravo, it seems to be an article of faith among liberal hipsters that Starbucks is, if not evil, then at least passe. I tell all of them to can it: I love Starbucks for exactly the reasons I stated and you confirmed. In fact, I would contend that with the possible exception of Peets, Starbucks coffee is comparable to that served in most indies. And as I mentioned, if you can get a surly, ear-pierced, tatttoo-ed, cell phone talking, table cleaning averse "employee" to actually serve you in an indie, you're lucky.

Me? I like the Starbucks ambiance, the employees, the coffee, and the fact that when I ask Starbucks employees for something, they say "my pleasure" and do it with a smile. I also sense that I can sit on the couches in Starbucks and contrary to my experiences in indies, not get fleas or a case of the mange.

And they have Wifi and that makes it even better.

July 6, 2008 10:18 AM

bigfish said:

"[Marty's] Man Crush on Obama is enough to qualify as a Latte Liberal in my judgement."

So if you see every Obama supporter as, by definition, a "latte liberal" (a term I assume you use as an insult), I hope you don't think that Obama's support is invalid because he is only supported by latte liberals, right?  If not, then fine.  If so, you're using circular reasoning.  If anyone who supports Obama is, in your estimation, a latte liberal, then Obama couldn't possibly have any non-latte liberal supporters, no?

Flipping your reasoning around, I could say that I think all members of the military are brutish oafs.  Therefore, the military is a backward institution because it's only populated by brutish oafs.

Or...anyone who votes for McCain is a racist, therefore McCain has no support beyond racists.

All of these arguments aren't only destructive, but they're just flat wrong.  Let's not pretend that everyone who disagrees with us or supports a different candidate are deranged.

July 7, 2008 12:05 PM

CRS9TNR said:

Bigfish,

I do not see every Obama Supporter as a Latte Liberal, and yes I use it in a slightly derogatory fashion.

Marty is lamenting the closure of the Starbucks Store in his neighborhood, and pointing out the old coffee shop was better.  I was pointing out that there are a few other indicators that we are in recession, and it was kind of amusing that Marty's first post on the tough times is via the Starbucks Store Closings.

I pointed out the Man Crush on Obama to remind another poster that Marty has his bona fides in the Left Wing of the Democratic Party.  Hillary & John Edwards were farter towards the center.  And at TNR you could reasonably refrain from a Democratic Endorsement to at least take a look at McCain/Lieberman.

I don't think you need to mention General Motors or Citibank when he is posting on his coffee loss.  But it is interesting that Washington D.C sees the hard times in America through Cafe Glasses.

As I said before, if you have a better description of Marty and his coffee concerns, let me know.  I'm open to suggestions.  How about 'Defender of American's Coffee and Individual Rights'?

July 9, 2008 6:34 PM

CRS9TNR said:

8 Days later:

IndyMac Seized by U.S. Regulators Amid Cash Crunch

July 11, 2008 8:57 PM

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