Dan's Papers - July 25, 2008 - Starbucks Closes Two Cafes On The East End

When Howard Schultz announced the closing of 600 underperforming Starbucks around the United States, everyone here on the East End wondered whether our seven units would survive.

Schultz bought a house here in the Hamptons last year, and people wondered if that fact would help keep all the stores here from getting the pink slip. After all, if you're one of the Vice Presidents of this coffee house chain, you don't want the founder and King to be walking around where he lives and see "FOR SALE" signs in the windows of his shops.

Well, when the announcement was made a few weeks ago, the managers of all the stores, after checking with all the others in our community, got to report that indeed, even though the axe had fallen, none here on the East End was hit.

That, however, was then. This, however, is now. And just a few days ago, the word came down from on high that two of our six Starbucks, the ones in Southold and in Southampton, were indeed among the 600 underperformers. It had just taken that long for the word to come filtering down to the troops.

My personal advice to Mr. Schultz back in February, when he announced that he would take back the reins of the company from the CEO he had hired, was not taken.

I suggested that he could keep his cafes, including all seven stores on the East End, if he kept some of them as traditional Starbucks locations, but changed the names of the underperforming ones to Starbucks-on-the-Go.

The way I saw it, and he didn't listen to me, was that he had brought Starbucks into a situation where you were damned if you did, and damned if you didn't.

The original concept was to create Starbucks coffee houses on the model of coffee houses in Italy. There would be lots of tables and chairs, lots of sofas and settees. People would come in, get their espresso or cappuccino, and then settle into sofas or chairs, relax and, perhaps, read a newspaper or talk with friends.

As Starbucks' popularity grew, this experience became more and more compromised. Pretty soon, you'd go into a Starbucks, see all the tables and sofas full and wish there was space for you, then go to the bar, get your coffee and, still unable to get a seat, leave. From that perspective, if you had too few people it hurt your business, and if you had too many people it hurt your business.

So why not just rename the awkward and underperforming stores - and I felt Southampton was underperforming because it was in an awkward and uncomfortable location, and East Hampton was so damn awkward because it was so busy that there were not only no seats, but long lines.

If I were Schultz, I would change those two to Starbucks-on-the-Go locations, with no place to sit, but with double the facilities to get the product out. It made sense to me.

But no, Schultz apparently just wants to shut down 600 stores and walk away. I think if he had taken my advice, he'd have been okay. But he didn't.

By the way, I was not offering my advice to Schultz without being asked. In March, he very famously asked the general public to make suggestions to him, and created a way on the Internet that you could do that. I really thought I had the answer for him. So I published it in Dan's Papers, where I knew he would look. My advice still holds, Mr. Schultz. I gave it to you freely. I don't expect you to follow it necessarily, but if you don't follow it, then don't ask me again. It's just good manners not to do that.