Why Starbucks In Australia Was A Massive Failure

Why Starbucks In Australia Was A Massive Failure

Any random person on the street can tell you why Starbucks was a failure in Australia — we have taste buds. When we order a coffee, we expect a delicious long black or creamy latte… not a half-litre of flavoured swill. However, if you’ve ever wondered about the nitty-gritty of the chain’s demise here, this seven-minute bit from CNBC serves as a great explainer.

While it’s true the Aussie palate for coffee is more refined than that of the States, there were a number of strictly business kerfuffles on Starbucks’ part, as Gartner research analyst Thomas O’Conner spells out:

…they launched too rapidly and didn’t give the Australian consumer an opportunity to really develop an appetite for the Starbucks brand. They also moved into regional areas, into outer suburbs of major cities … it was too available .. it wasn’t an organic growth.

To put this in perspective, Starbucks Australia had 87 stores at its height in the country… but it certainly didn’t stay that way:

It’s first seven years in Australia, Starbucks accumulated 105 (142) million dollars in losses. By 2007, Starbucks Australia was hanging on by a thread, taking big loans from the US, totalling up to 54 (73) million dollars.

And in 2008, Starbucks announced it was shutting down 61 stores [of 87].

Of course, Starbucks didn’t vanish completely. You can still find stores in capital cities, where they appear to do alright, but the U.S. beverage giant’s dream of having one on every Australian street corner are long gone.


This article was originally published 28/7/18.

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