The Country Where Starbucks Franchise Failed

There is one country where even the mighty Starbucks could not find traction! After losing 150 million dollars Starbucks finally gave up and sold all remaining locations. See which country it was and find out what happened to bring down a giant.Show more

So way back in 2000 Starbucks opened their first location in Sydney. At first Starbucks assumed everything was going to plan and the implementation that had worked so well in other countries would also work in Australia. But it was quickly determined that Australia was not like other markets at all. In fact Australia was the single hardest market Starbucks had ever seen
Over the next 7 years Starbucks would lose almost 150 million dollars in the Australian marketplace. Eventually in 2008 after years of hemorrhaging money they decided to close 2 out of every 3 stores and went from 87 stores all the way down to a meager 26 stores. Now it should be mentioned that 2008 was especially tough for a lot of businesses and even back in the USA Starbucks closed 600 US based stores.
So things remained stagnant up until 2014 when all Starbucks locations in Australia were purchased by the Withers group who acquired the remaining 24 stores. When we visit the Australian Starbucks website at www.starbucks.com.au --- and click the store locator map it appears today they have a total of 46 stores, so have doubled in size since 2014. The Withers group is one of Australia's wealthiest families and are also the owners of all the 7-eleven franchise in Australia. Withers Group chief executive Warren Wilmot was quoted as saying "Our aim will be to make Starbucks the most successful coffee chain in Australia."

But what what went wrong that Starbucks just couldn't make it in Australia? And will they ever be able to make it there? Experts who suggest several possibilities.

1. Starbucks opened in lower traffic areas and charged more than competitors. Charging more money for an inferior product is an obvious way to fail in anything. To quote an actual Australian on the matter Logan Booker in Gizmodo suggests that the reason Starbucks failed in Australia is because Australians have higher standards. Logan suggests "When we order a coffee, we expect a delicious long black or creamy latte... not a half litre of floured swill". Don't hold back Logan tell us how you really feel. Now in terms of their site selection - this was a strange choice, not sure what the rationale was behind opening in the smaller markets as these markets likely had very loyal customers at their indy local coffee shops.
2.Launched too fast and didn't give Australians an opportunity to develop a taste for the brand. I disagree with this because when you look at other regions like China and Starbucks opening a store every 15 seconds they are still flourishing, it appears that most markets are OK with that level of growth and my guess is if Starbucks had served something other than half liters of flavored swill they could have grown as fast as they liked.
And the final and most plausible reason in my mind is that Australians are very particular about their coffee.There are about 6500 independent coffee shops across the country that generate over 6 billion annually in coffee sales. Apparently back in the 50's when Italian and Greek immigrants came to Australia they brought with them very high standards of coffee and the massive coffee culture which exists today. The average Aussie drinks 3-4 cups every single day.
It will be interesting to see how the Withers group continues and whether Starbucks will in fact become the most successful coffee chain in Australia as suggested by the new owners. Also interesting is that Starbucks has opened a very upscale Stone and Bronze location in Milan Italy. This location is one of only 5 reserve roasteries in the world and is the only roastery in all of Europe. Starbucks suggests this is the most beautiful Starbucks location in the world.
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