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> A good share of Starbucks locations worldwide actually run at a loss. The mega-busy ones elsewhere make enough profit to cover the loss making stores. It's si
by retsibsi 9y ago
> A good share of Starbucks locations worldwide actually run at a loss. The mega-busy ones elsewhere make enough profit to cover the loss making stores. It's simple economics of scale.
I'm probably missing something obvious, but how does this work? What is the purpose of keeping the loss-making stores running?
- Jaruzel 9y agoTo create brand loyalty. If you regularly get coffee in a loss-making Starbucks, you are more likely to always get coffee from Starbucks where-ever you are.
- always_good 9y agoWorked on me. I associate Starbucks with a place I can go to work for as long as I need after buying a large coffee. These sorts of submissions have made me self-conscious about going to non-Starbucks to get any work done, heh.
- kbos87 9y agoI haven't read this about Starbucks in particular, but that is a pretty common trade-off for large retail businesses to make. They accept the fact that a certain percentage of stores will operate at a loss, but keep them in existence for other reasons (branding, in most cases) if the losses can be managed. A friend of mine is a middle manager at a retail kitchen goods chain you've probably heard of. I've heard from him that many of their stores are always struggling to break even, and that most of the business is supported by a small number of stores that do an outsized amount of business.