This Just In! People Refuse To Pay Five Bucks For Coffee!

As I have mentioned previously, I have never understood the consumer's allure for Starbucks coffee. I like the taste of the stuff, and if my wife is buying, I will gladly enjoy a venti house coffee. But paying upwards of five dollars to turn a cup of coffee into what amounts to be a milk shake just simply never made any reasonable sense.

Now with the economy on the toilet. Starbucks is hitting on hard times... It closed hundreds of stores last year, and is now realizing that people have even less money for such foolishness now than they did before the holidays. So Starbucks is really pulling out the stops. From the Financial Times:

Starbucks is to close more stores, sell a newly delivered $45m corporate jet and cut headquarters staff and worker benefits as it battles a slump in sales that has tracked the broader collapse in global discretionary spending.

The coffee retailer said on Wednesday that it would shut 300 more “underperforming” locations – 100 of them outside the US – after a 9 per cent fall in comparable sales in the last three months of 2008. It announced a first wave of 600 US store closures last summer.

The move will result in about 6,000 job losses, while an additional 700 corporate and support jobs will also be cut – half of them at its Seattle headquarters.

Howard Schultz, chief executive, said that since early December the company had seen a far more rapidly deteriorating global economy than it had expected before the holidays.

“The data shows that by virtually all statistical measures the pace of weakening in the business environment and global economy we were anticipating has been accelerating,” he said.

Mr Schultz has asked for his salary to be cut to less than $10,000 – from more than $1.2m previously – and the company is selling two of its three corporate jets, including a Gulfstream 500 delivered in December.

US comparable stores sales fell 10 per cent during the quarter, as fewer customers spent less on their visits.

International comparable sales also turned negative for the first time, with the biggest slowdowns seen in the UK and Canada, its two largest international markets. Starbucks has about 670 company-owned stores in Britain, and around 7,000 in the US.

The company said that it was also further reducing its planned new store openings in 2009, with 140 new US stores, down from its previous target of 200, and 170 new international stores, down from a previous target of 270. It is also cutting back on plans for new licensed stores.

I wonder if we'll look back a few years from now and look at the days of gas guzzling SUVs and premium coffee shops and the other examples of our high-spending, high risk economy as the "good times", or as times of wretched excesses. Either way - just as our grandparents exercised thrift as survivors of the Great Depression, I think we will all think twice before we return to our spending habits of old.

(By the way, by belittling Starbucks, I do not ignore the human toll this is taking. I have a nephew who is a barista at Starbucks. I hope he survives the cuts!)

Why Do I Still Live Here?

Well, the short answer of why I continue to call Montgomery County home is that the housing market is in the tank, but beyond that, I really DO wonder sometimes why I stay in the county that I've called home virtually my entire life.

Regular readers of this blog have heard me bitch in the past about the broken county government that has never seen a tax it didn't like. It simply costs way too much to live here, and it's largely because the labor unions representing county workers are pulling the puppet strings that control our elected leaders. I say this, by the way, as the husband of a county school teacher.

The latest abuse and waste? A new audit from the county shows that more than 60 percent of the county cops who have retired over the past four years were placed on disability as they walked out the door - ensuring them of 2/3rds of their full-time pay for the rest of their lives tax-free. One of the "disabled" officers who retired won a fitness competition just a year after retiring! If the officers had simply taken retirement benefits, they would have been entitled to 60 percent of their salaries, and would have been taxed on that money. Their benefits would also have dropped considerably once they started receiving social security.

I don't know enough about labor contracts or the law to know whether anything can be done about any of this, but I DO know that there's plenty of fraud being committed, and as a taxpayer, I'm being left holding the bill again.

What's really at the bottom of all this is the imbalance of power in Montgomery County politics, where there is not a SINGLE elected Republican officeholder. The Democrat lawmakers are all beholden to the labor unions that helped them get elected - the same unions that can damned sure get them UN-elected if they don't toe the line. The Democrats would never admit to this, but they (and county residents) were better off when there were still a few liberal Republicans around to offer some pushback. Instead, the County Executive and Council are in many ways just pawns to the real power base.

Where have you gone, Howie Denis? A county turns its lonely eyes to you!

The Death Of Four Dollar A Cup Coffee?

Starbucks has announced a 21 percent drop in year-to-year earnings, as the recession has perhaps finally proven to be the silver bullet to kill the mega-coffee beast. I have never understood the allure of paying way-over premium prices for coffee, even as my own wife has made it a daily part of her caffeine routine. I always took solace in the fact that I made my morning java stop at Seven-Eleven, and paid less for my 24-ounce fix than Robin did for her 16-ounce glob of sugary coffee-like goo... At least we balanced each other out that way. I guess in hindsight, Starbucks was the perfect symbol of the good times... Charge more for common goods, put a "premium" label on it, and buy up a cache of wheelbarrows to cart the cash away. Well, where are the good times now? Pretty soon, the baristas will be joining me in the unemployment line!