Starbucks (SBUX) is going to put another 150 stores in Europe. They are closing them in the US, so perhaps it all balances out.
The coffee chain has come up against competition from places like McDonald’s (MCD) and Dunkin Donuts in the US. And, the economy does not support people who can buy $5 a cup coffee.
Maybe Europe is different. But, McDonald’s is there along with a recession.
Starbucks is doing a clever job of hedging its bets as it expands on the continent. Instead of opening its own stores, it will "license 150 new locations in Britain, France and Germany over the next three years in a deal with UK group SSP," according to Reuters.
The news seems to be telling about Starbucks level of confidence in itself as a company. It could open its own stores in Europe, take all of the risk and all of the reward. Instead, it is inching in. That says a great deal about the firm’s view of itself.
Starbucks is not only doing poorly, it is losing its appetite for putting its own capital, both financial and human, on the line.
Douglas A. McIntyre
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