No Rolex, No Starbucks..Are We Doomed...

[Tools]

I've heard about the hard economic times, but I'll admit....except for paying most of a C-note for a tank of gas, I really don't see most of it..

However, I keep reading about Rolex closing (pulling) as many as 25% of their franchises and Starbucks closing 600 of their outlets.

Is this really a better economic indicator ?

Does Rolex close shop because some stores are no longer pushing watches... or what ?

Here is a thought..

5,000 bucks for a basic watch.......2 bucks for a basic cup of coffee..

600,000 if you want it blinged up.........5 bucks if you want foamy milk and caramel.

Do we see some parallels here ???

Maybe these two overprices luxury products are spelling doom for our over racing demands and "got to have" society..

I don't know..

What do you think ???

[Lol-x]

I think you need a coffee to reeeelaaaaaxxxx

It's all good you got to spend your hard earned some how

If Starbucks learned how to make a good quality coffee, they might just get a few more customers.

[cbrenthus]

I think Starbucks has over exposed themselves for a long time, anyway. I think they just have too many locations, and even if the economy was great they couldn't sustain their growth much longer. They've become a 1-hit wonder that was overplayed and people are getting sick of. The economy makes it worse, but I think it was happening anyway.

As for Rolex, I hadn't heard about them closing shops, but I can definatly see people buying less luxury watches as the economy slows.

[astcell]

Gas went from $2 to $5 in what, 2 years? Even Rolexes did not increase 150%.

[DSJ]

Originally Posted by Tools

I've heard about the hard economic times, but I'll admit....except for paying most of a C-note for a tank of gas, I really don't see most of it..

However, I keep reading about Rolex closing (pulling) as many as 25% of their franchises and Starbucks closing 600 of their outlets.

Is this really a better economic indicator ?



What do you think ???

Oh no, now I'm going to have to cross the street to get my Starbucks!

Starbucks was overly ambitious. Here in MN, they have strong competition with Caribou and Dunn Bros.

Rolex? Well, people are having a hard time justifying a dinner at a restaurant, so anything that is purchased with discretionary income is going to be scrutinized as families are tightening their belts because of petroleum prices and correlating increases in everything else as a result.

I went to Starbucks and bought a pound of beans. I'm enjoying my Starbucks coffee I made this morning in my Mr. Coffee!

[BigHat]

Originally Posted by Tools

I've heard about the hard economic times, but I'll admit....except for paying most of a C-note for a tank of gas, I really don't see most of it..

However, I keep reading about Rolex closing (pulling) as many as 25% of their franchises and Starbucks closing 600 of their outlets.

Is this really a better economic indicator ?

Does Rolex close shop because some stores are no longer pushing watches... or what ?

Here is a thought..

5,000 bucks for a basic watch.......2 bucks for a basic cup of coffee..

600,000 if you want it blinged up.........5 bucks if you want foamy milk and caramel.

Do we see some parallels here ???

Maybe these two overprices luxury products are spelling doom for our over racing demands and "got to have" society..

I don't know..

What do you think ???

Always a great question at the turn of the economy. Are luxury goods demand inelastic?
The thing about Rolex is that it's global presence allows for a shifting of product to "hot" emerging markets like India and China. I'd say a serious recession in the US causes Rolex less than 5% drop in domestic sales. Ferrari will never notice
Starbucks on the other hand is a classic overly saturated market that reaches a much broader demographic. It is a nice treat, but a latte was no lasting value and is much more of a mass market product than a Rolex. They will suffer a great drop in demand as resources are needed to address more pressing needs like gas for the car.

[jasonbellevue]

Interesting observation Tools. Starbucks closing 600 shops, could very well be a better economic indicator than anything else. Sign of the times?

[astcell]

Originally Posted by Lol-x

If Starbucks learned how to make a good quality coffee, they might just get a few more customers.

Heck you have to speak their language to order! You cannot walk in and say "Waitress! Large Joe over here!" Now it's "Good morning Madame Barrista, I'd like a venti grande cappucino vanilli with creme de cocoa and sugarless Amazonian java grains picked from trees by hairless monkeys, top it off with sterilized picasso chocolate created by the blind orphans of Quetzaqtl, and give me a paper-free straw from the Peruvian rainforest on the moon. And I have 4 coupons."

[jasonbellevue]

Originally Posted by astcell

Heck you have to speak their language to order! You cannot walk in and say "Waitress! Large Joe over here!" Now it's "Good morning Madame Barrista, I'd like a venti grande cappucino vanilli with creme de cocoa and sugarless Amazonian java grains picked from trees by hairless monkeys, top it off with sterilized picasso chocolate created by the blind orphans of Quetzaqtl, and give me a paper-free straw from the Peruvian rainforest on the moon. And I have 4 coupons."

[redshirt1957]

Per the terms of my probation agreement, I am not allowed to respond to any threads that contain any of the followng words; gun, religion, sex, economy, or recession. I have cheated a little bit on the sex threads. Don't tell.

[DSJ]

Originally Posted by redshirt1957

Per the terms of my probation agreement, I am not allowed to respond to any threads that contain any of the followng words; gun, religion, sex, economy, or recession. I have cheated a little bit on the sex threads. Don't tell.

Um, you just responded, technically!

[BigHat]

Originally Posted by astcell

Heck you have to speak their language to order! You cannot walk in and say "Waitress! Large Joe over here!" Now it's "Good morning Madame Barrista, I'd like a venti grande cappucino vanilli with creme de cocoa and sugarless Amazonian java grains picked from trees by hairless monkeys, top it off with sterilized picasso chocolate created by the blind orphans of Quetzaqtl, and give me a paper-free straw from the Peruvian rainforest on the moon. And I have 4 coupons."

Sadly, you're not far off the norm.

Never have spent 5 bucks for a cup of coffee and never will.

I make my own. Think the break even point is some time in 2016.

[Lisa]

Originally Posted by astcell

Heck you have to speak their language to order! You cannot walk in and say "Waitress! Large Joe over here!" Now it's "Good morning Madame Barrista, I'd like a venti grande cappucino vanilli with creme de cocoa and sugarless Amazonian java grains picked from trees by hairless monkeys, top it off with sterilized picasso chocolate created by the blind orphans of Quetzaqtl, and give me a paper-free straw from the Peruvian rainforest on the moon. And I have 4 coupons."

That is SO TRUE! But I love their coffee. I can't help it. Have thought for years, though, that they've overextended themselves. What were they thinking?

[diversified]

Starbucks must be marketing masters to get so many people to spend over $1.50 for a cup of coffee.

[Nigel Tufnel]

If a brand strands too far from its core discipline, as Starbucks has done (sandwiches, etc.), resulting in lost focus, a retrenchment is in order. You back to basics, and do what you do well, and discard what you do poorly. I think this is exactly what is happening in most businesses today in the US, Starbucks no exception. With Rolex, I don't believe the demand for luxury goods is inelastic. It can be inelastic when supply is less than demand (Ferrari, a Hinkley boat, a Mac iPhone, etc.). With Rolex, which I admit is a company I don't understand, where they can produce very clean, elegant time pieces, yet also crank out pure gaudy and tacky ones as well, I think they are trying to broaden their base of demand into the jewelry-watch sector.

[veefour]

Profit on a coffe is about 80%.
What's the margin on a Rolex?

[astcell]

I saw a Simpson's episode where Bart and his buddy get locked in the mall all night, and it shows three floors of starbucks, and one non-starbucks store is closing and a starbucks is going to open there soon.

And then Jay Leno talked about the newest starbucks in hollywood that was opening inside the restroom or a starbucks.

[roadcarver]

GM truck division in Oshawa, ON is closing its doors in 2009;
Polywheels, a manufacturer of heat shields for trucks has layed off 600 employees;
Analysts are indicating that GM is not prone to bankruptcy;

These are all due to high gas prices IMHO.

Re: Starbucks.
Starbucks has waay too many stores in the first place so closing some shops is not a surprise.

[CoopJr]

I went into a Starbucks just once. I found the employees to be pompous and the coffee over priced and over rated. Dunkin Donuts or one of the 2 Greek owned Diners near me make the best coffee to go. I also make great coffee with our Cuisinart Grind & Brew and take a travel mug with me most mornings.

As for the economy...well I have seen it better but I don't think we are heading for a depression either. But what I do see is frustrating. Back in February, I came within a hair of losing my job. I paid off my A4 6 months ago. That was $400 a month I wanted to put into my 401K or employee stock plan. But in these last 6 months that $400 has been completley eaten up with increases in gas, food and a 15% increase in my property taxes. Certainly not doom....but certainly angering.

[astcell]

Originally Posted by roadcarver

GM truck division in Oshawa, ON is closing its doors in 2009;
Polywheels, a manufacturer of heat shields for trucks has layed off 600 employees;
Analysts are indicating that GM is not prone to bankruptcy;

These are all due to high gas prices IMHO.

Re: Starbucks.
Starbucks has waay too many stores in the first place so closing some shops is not a surprise.

I have a good friend in Oshawa and hear about it all the time. She feels so bad for the folks there who live paycheck to paycheck.

[GMTII Owner]

I don't know if Starbucks closing 600 stores is a sign of economic times or to aggressive of a growth strategy. IMHO, I think it is the latter.

John

[timetravel125]

Starbucks is faced with competition from McDonalds and other restaurant chains. McDonald's medium iced coffee is $1.89; and a large order is $2.09, I believe. Whenever I am at McDonald's, people are drinking iced coffee with their fries, big macs and quater pounders! Starbucks offerings are more expensive.

Rolex, is also faced with the same dilemma as Starbucks--competition, from other watch manufacturers. Some WIS's are into cheaper dive watches and limited editions brought out constantly by manufacturers, such as DOXA, Ocean 7, Korsbek, Stowa, Sinn, etc. Rolex prices, are beyond reach, for many people.

My two cents.

Happy 4th!

Cheers.

[jdc]

Originally Posted by astcell

Heck you have to speak their language to order! You cannot walk in and say "Waitress! Large Joe over here!" Now it's "Good morning Madame Barrista, I'd like a venti grande cappucino vanilli with creme de cocoa and sugarless Amazonian java grains picked from trees by hairless monkeys, top it off with sterilized picasso chocolate created by the blind orphans of Quetzaqtl, and give me a paper-free straw from the Peruvian rainforest on the moon. And I have 4 coupons."

Sounds like you have the same taste in coffee as some of my co-workers I think they have have to use 5 coupons though.

Never understood the hype of Starbucks I think the coffee is horrible - we have loads of these style coffee shops sprouting up all over the place in my area. The large size of the cups is stupid and then there is the associated health issues related to consumption of coffee through caffeine addiction and large number of calories.
I advise people to follow my example and keep up the British traditions of only drinking in pubs. Pint of Guinness please bar man

[Ashley]

It's unfortunate about places closing and all of those staff losing their jobs. It's happening in a lot of airlines as well.
Luckily, I don't drink coffee, fly, or drive!

[Luminor]

I dunno guys, there's nothing better than a frappucino with caramel.

[seantk]

I stopped going to Starbucks... I kept ordering the "tall" and it seemed rather small


Sean

[Ursa Major]

I think Starbucks has changed the culture in the last 15 years. My local Starbucks is taken over at 9am by the yummy mummies getting together while their kids are at Gymnastics a few doors down, and the tables are filled all day by people having informal business meetings - where did all these people go before 'bucks opened up? (and Peets, and...). When I'm traveling, I have a lot of my own meetings at Starbucks - it's neutral ground and has WiFi. In retrospect, I don't remember where people got together informally before Starbucks came along when the timing was wrong for a meal and they didn't want to go to a bar. Folks might make the decision to make coffee at home/the office in the maker for their two cups in the morning, but I don't see any slacking of 'bucks as a meeting place.

Is the reduction of 600 stores a net loss? I think they're still growing/adding new sites, but the 600 stores being shut down are individual shops that were poorly located or underperforming. They'll be replaced in the collective by newer stronger stores - we'll all be assimilated.

[RW16610]

Originally Posted by jasonbellevue

Interesting observation Tools. Starbucks closing 600 shops, could very well be a better economic indicator than anything else. Sign of the times?

Yes Tools you make a very good point in the original post. So many factors that come into play and some people in society still fail to see how macroeconomics impacts their lives.

To me I feel a lot of this could have to do with the economy. Someone did mention airlines but that is nothing new. Aircraft has ASTRONOMICAL costs to keep on the groun, fly or even just own. Airlines have always been going out of business even with a better economy.

Maybe for some the pricing is a factor. Other coffee shops have stuff that hits the spot for less. This is a big, costly habit for some who would not even realise it until writing down each expense on paper. People paying as much or more than their auto insurance each month just to have coffee and treats from the store.

Sad to see Rolex cutting back on AD. Starbucks bothers me less as I do not go there but know what it does to all those who will soon have no job.

Originally Posted by Ursa Major

Is the reduction of 600 stores a net loss? I think they're still growing/adding new sites, but the 600 stores being shut down are individual shops that were poorly located or underperforming. They'll be replaced in the collective by newer stronger stores - we'll all be assimilated.

Well at any coffee shop / diner type setting, it became a trend as the years went on. Real estate agents etc taking clients there for various business reasons and advantages.

What you point out is logical, the stores opening in a new location because of limited customers / business in a particular area. Either way I still feel it is a little more than that due to how many other companies are on a slump in a senese for various reasons with the economy.

[John685]

IMO, everything is liable in a recession. However, some things more than others.

Rolex may not be hit as hard due to their catering to a more affluent market than Starbuck's. Their reputation and products date back t the early 1900's whereas Starbuck's has only been around for 20+ years.

Assuming they have the funds, a true Rolex enthusiast will probably buy the watch, knowing it is a one time purchase. On the other hand, knowing you are going to buy that cup of coffee every day, if not more often, you might choose a cheaper price coffee. I know it doesn't make much sense but the mind can come up with some strange decisions.

I personally like Starbuck's and that's what we drink at home too. I have cut down some on the trips to their store but it's primarily due to the price of gas rather than the coffee.

As far as trips to the AD? Naw, gas doesn't matter in that scenario.

I did hear of a comment regarding the Starbuck's closings. A lady said they were closing 38 of them on her block. Perhaps that's the problem.

[ratae1950]

I assume both Rolex and Starbucks are making their decisions on the basis of a long range plan. Too bad we can't say the same for the government. Planners [urban] and environmentalists have been saying for decades that our suburban lifestyles are not sustainable. To hear people whining these days on NPR about their 100 mile EACH WAY commute costing a fortune I can only shake my head in disbelief. We need to wean ourslves off oil, learn to walk again and down size our life styles. Fortunately the current leadership which believes planning is 'socialsm' will not be around much longer.