Starbucks Feels the Heat of Competition

Amid slowing growth in an increasingly crowded market, Starbucks announced it will close 150 under-performing, company-operated U.S stores in 2019. Historically, the Seattle-based chain has closed about 50 stores per year. The upcoming store closings will occur primarily in urban markets saturated with Starbucks locations. However, Starbucks’ sales are also slowing, as the company expects just 1% growth in same-store sales for the third quarter of 2018—the worst performance in about nine years.  One reason is increasing competition from trendy, independent neighborhood coffee shops and artisan roast cafes that offer customers an experience.  In addition to the more upscale, independent coffee shops, competition is heating up from lower-priced fast-food chains, including Dunkin’ Donuts and McDonald’s.