Is Starbucks In Its Death Spiral?

JULY 31ST: Updated on my blog at Examiner.com: Live by the Latte, Die by the Latte"

It looks more and more like the Starbucks we grew up with has irretrievably lost its way. Every day brings news of layoffs and losses, maps of store closures, tanking stock price, deckchair shuffling in the executive suite, and the frantic introduction of new products (banana smoothies, indeed).

In the beginning, down at Pike Place, a regular customer would know every company employee by name. Now there are over 150,000 people on the Starbucks payroll, even after the layoffs. And what a bunch of gossips they are!

CEO Howard Schultz makes a big point of citing Starbucks as the world's most trusted brand, with over 40 millions of customers a week. Loyal they are, too, mounting (apparently spontaneous) protests to keep their forlorn neighborhood store open. But everyone's missing the point.

Starbucks was never about coffee; it was a cup to be seen with. To hold the Green Mermaid meant you'd navigated the shoals of barista-speak ("Fritalian"), and that you had the ready cash to spend on high-end snacks. Those days are over, and fiddling with the product mix ("leveraging new platforms") is pointless. Blame Howard's hubris, blame the economy, blame gas prices, blame stupid real estate choices if you will, but today's Starbucks is just another candy store.