Wednesday, July 2, 2008

Starbucks Coffee Takes a Hit From $4 Gas

Starbucks coffee 600 storesAs the American economy slows due to higher energy costs, it's really not a surprise that Americans have less discretionary money to spend. With $4 gas a reality in the country, Americans are spending much more just to get to work each week.

And the most recent victim of the oil-spiked downturn in the economy appears to be Starbucks.

The Seattle-based company announced this week that they are closing 600 stores across the country due to slower sales. In addition, Starbucks will slow open of new stores this year.According to Starbucks CEO Howard Schultz the slower economy is to blame:

For more than a year now, we have seen the adverse impact that a slower economy and dramatic decline in consumer confidence have had on our U.S. business. This has resulted in a drop in comparable store sales due to a reduction in customer traffic.
With the price of oil at record levels over $142 a barrel, and the average price of gasoline at $4.09 a gallon, spending $4 for a cup of coffee appears to be off the menu for millions of Americans each day.

Source: Starbucks


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