Starbucks to shut 61 and cut almost 700 jobs

Posted by Daniel Palmer on 30th July 2008

Coffee cups on table - Starbucks

Starbucks has announced they will close more than two-thirds of their Australian outlets by Sunday August 3.

The decision to close 61 of their 84 Australian stores was finalised following a meeting of store managers yesterday afternoon, and comes at the end of a turbulent month for the company.

The American coffee giant announced earlier this month that they would close 600 stores in America as part of their “transformation strategy” in the wake of declining sales caused, in part, by the decline in economic conditions in the US.

The company, which first entered Australia in 2000 with a store in Sydney’s CBD, reported that the remaining stores will be in and around three core cities (Sydney, Melbourne and Brisbane) but are yet to make public the list of closures.

“The list of stores that are scheduled for closure will appear on this site by 5pm July 31st after all affected stores partners (employees) have been personally notified,” they advised in a statement on their website.

The largest coffee chain in the world, Starbucks currently operates over 15,000 stores worldwide but have struggled to gain a foothold in the Australian marketplace due, to a large degree, to the strength of the café culture before they arrived eight years ago. They closed three underperforming stores back in 2004, a clear signal of the troubles they were facing down under.

Following the closures in the US, speculation escalated that the company would make cutbacks in Australia but they suggested the American decision would have no impact on Asia/Pacific operations.

“We are well into the implementation phase of transforming Starbucks and we believe that this difficult, yet necessary, decision to close stores in Australia will help support the continued growth of our international business,” Mr Schultz, head of Starbucks, reported in a statement. “While this decision represents business challenges unique to the Australian market, it in no way reflects the strong state of Starbucks business in countries outside of the United States.”

“We are thankful and proud of the contributions our partners make every day and we are committed to treating all of our partners with respect and dignity,” he concluded.

Starbucks also announced the further cut of 1000 jobs in America, as the credit crunch takes its’ toll on American consumer spending.