Starbucks closing cafes; CEO calls performance 'not acceptable'

The company closed over 8,000 stores in the United States for the afternoon to conduct racial-bias training for its employees following an incident invo

The company closed over 8,000 stores in the United States for the afternoon to conduct racial-bias training for its employees following an incident invo

That alliance frees Starbucks to focus on improving its mainstay USA cafe business, where traffic growth had stalled.

The affected stores are located in mostly urban areas that are densely populated with Starbucks locations.

Coffee retail giant Starbucks announced Tuesday its plan to close approximately 150 stores across the United States as a result of "slow growth", sending the Seattle-based corporation's stock prices down almost 7%.

The company said comparable sales growth at existing stores, a key measure of retail performance, was expected to be just 1 percent in the current quarter, despite a booming economy and a broadly healthy restaurant industry.

Closing stores is not new for businesses, but the 150 figure is almost three-times the average for the company.

A video of the arrest went viral, prompting a public backlash and the trending hashtag #BoycottStarbucks.

The former Chairman Howard Schultz stepped down earlier in June.

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"It seems fairly clear that the low-hanging fruit on causing everybody to get addicted to their (Starbucks) fantastic products is kind of in the rear-view mirror", said Tony Scherrer, director of research at Smead Capital Management.

'At least in the Starbucks heavy markets, the people that are going to drink coffee are already drinking it'.

"Our recent performance dos not reflect the potential of our exceptional brand and is not acceptable", he said.

It is also putting the brakes on the rate of new store growth, closing about 150 under-performing company-operated stores, up from an average of 50 closures a year recently, and by slowing the number of new stores operated by third-party licensees. China is the company's biggest growth driver with same-store sales rising 4 percent in the last reported quarter.

In March, Rosalind Brewer, Starbucks' COO, also said the market for vegan food was significant and that the company was working on launching more plant-based food and drinks.

The closing stores are often in "major metro areas where increases in wage and occupancy and other regulatory requirements" are making them unprofitable, Johnson said.

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