Starbucks is among the most recognizable brand names in the entire world — so what could be driving the closure of hundreds of locations across the United States, including several in Greater Boston?
A lot of factors are likely at play here, analysts say — including increasing competition, changing consumer habits and inflationary pressure. That's as the company looks to recalibrate with a billion-dollar restructuring plan under its new CEO.
Steve Clark, president and CEO of the Massachusetts Restaurant Association, joined NBC10 Boston's Restaurant Recap to discuss the latest trends in the industry that could be impacting Starbucks.
He noted that when it comes to coffee, people in Massachusetts typically want it fast, reasonably priced and to be able to get it when they can.
Industry-wide, he said, there's a "softness with sales" as well as growing pressure on businesses from rising labor wages and food costs.
"I think the coffee industry is no different," he said, agreeing that in Boston's case, foot traffic in office-heavy neighborhoods could also be playing a role here.
With its recalibration, Starbucks is investing into its locations to make them appeal as a "third place" — in other words, somewhere other than work and home that people can sit in and feel apart of a community.
"Consumers are making choices with how they spend their disposable income," Clark said. "We're seeing that in the full service restaurant world. It's not like the people are cutting it out completely, but if someone used to go out, let's say eight times a month, maybe they're going out four times or six times a month."
With an increasingly challenging market to operate in across the board, Clark said that restaurants, coffee shops and everything in between need to be strategic about their operation to make sure they're making a profit — especially when margins were already slim to begin with. That may look like focusing staffing on the busiest hours, streamlining menus and making takeout more easily accessible.
In Starbucks' case, Clark said the company is known to make data-driven decisions, and this wave of closures is just another part of a broad strategy.
"It's definitely fascinating, with how they make their decisions and how they project growth and how they target their people," Clark said. "But they're a global brand making those decisions."
Watch our full conversation on the player at the top of this story.