Thread: Starbucks cuts 6700 jobs in U.S..but expands in Mexico

Starbucks Grinds on in Mexico Amid Crisis
Feb. 9, 2009
Garrett Nasworthy--The News, Mexico City
starbucks mexico, starbucks performance, international coffee
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Starbucks may be suffering in the United States, but in Mexico City, the popular coffee brand is still moving full steam ahead.

Citing the bad economy, the Seattle-based company announced last week that it would shut 300 underperforming stores -- in addition to the 600 it already planned to close in the United States.

But in Mexico, Alsea, the corporate restaurant group with an 82 percent controlling stake in Starbucks Coffee Mexico, said it would expand according to plan in 2009.

Bryant Simon, a Starbucks expert at Temple University in Philadelphia, said he was not surprised by the ambivalent outlook north and south of the border.

"In the United States, Starbucks has lost their 'cool' factor," Simon said. "In Mexico, its status as a high-end place to drink coffee still remains."

Alsea plans to open 14 new stores in Mexico in 2009, representing a growth rate of 5.4 percent, the company said in a press release last week.

In addition, Alsea plans 12 new shops in Argentina, 17 in Brazil and 4 in Chile in 2009.

Alsea spokeswoman Selene Gonzalez told Reuters that the company still sees plenty of room to grow in Latin America.

"They are very different markets. The brand is very new here so we don't have as many stores as in the United States," she said.

Starbucks appears to be borrowing a page from the McDonald's playbook when it comes to foreign expansion, Simon said. When the fast food chain lost its status as a "place to be" in the United States, it dropped prices domestically while simultaneously expanding into foreign markets with a more "premium" product.

"In the States, Starbucks is beginning for the first time to compete on price, by offering unprecedented discounts and customer cards and are bringing in the higher-end profits from abroad ... exactly what McDonald's did in Asia and elsewhere," Simon said.

In the meantime, Starbucks in Mexico is taking advantage of a wide-open market for high-end, high-status cafAc ambience.

"People want a place they can go where they feel safe, they feel comfortable they can treat themselves," Buck Hendrix, president of Starbucks Latin America, told The News in an interview in late 2007.

In order to enjoy that comfort, Hendrix said, customers are willing to pay U.S. prices for coffee, despite the availability of cheaper alternatives at local shops.

The first Starbucks in Mexico opened six years ago on the capital's Paseo de la Reforma. Since then, Alsea has opened a total of 285 Starbucks stores around the country.

There were more than 11,500 U.S. Starbucks stores and more than 5,000 abroad at the start of the year.

http://www.hispanicbusiness.com/news/20 ... o_amid.htm

Does Starbucks know something we don't know?