Starbucks to leave Australian shores?

Posted by Daniel Palmer on 29th July 2008

Starbucks cafés are set to close at 2pm this afternoon for a meeting between managers, which has fuelled speculation the company may close stores in Australia.

An email sent to the Sydney Morning Herald last night suggested that store managers were asked to shut up shop at 2pm to attend a 4pm meeting, and rumours are beginning to circulate that the Seattle-based giant may even pull out of Australia.

The news comes following the announcement of 600 store closures in the US at the beginning of the month due to a slowdown of the American economy, which had disrupted their rapid expansion. The plans were claimed to be a part of their “transformation strategy”, but at the time they suggested it would have “no impact” on their Asia-Pacific operations.

The union which covers most Starbucks employees in Australia, the Shop, Distributive and Allied Employees Association, has indicated they are unaware of any plans to close stores in Australia. “We have not heard anything. There’s a story that the company is contemplating closing outlets. I must admit that surprises me,” their National Secretary told the Sydney Morning Herald.

Their growth in America from humble beginnings in 1971 has been impressive and they are now the largest coffee chain operator in the world. In Australia, however, growth has not been as rapid. With the café culture already firmly entrenched by the time they arrived it has not been easy for them to become established. Strong competition from the likes of chains of the ilk of Gloria Jean’s, McCafé and the Coffee Club as well as small business, has limited growth and, in 2004, they closed three underperforming stores indicating the difficulties they were encountering down under.

Starbucks first entered the Australian marketplace in 2000 with a store in Sydney’s CBD and currently operate 85 stores. Ninety per cent of these stores are in Victoria, New South Wales and Queensland.

Starbucks has remained coy about the speculation but a formal announcement about their plans is likely to be made at about 5pm, following the meeting of store managers.