When Starbucks was setting up shops in Australia, it had a long list of massive expectations. Any random person can tell why Starbucks’ massive aspiration endured a turn in tables. When ordering for coffee, Australians expect a delicious creamy latte or long black coffee, not a significantly flavored swill.
While Starbucks café resides in almost every part of the world, the numbers are quite small in its home country, Australia. The reason is that the company endured a closure of over 70 percent stores within the underperforming regions, remaining with only 23 stores in entire Australia. The company began its official operation in 2000 and created up to 90 locations as of 2008. Its fast growth was directly un-proportional to its popularity growth- an element which serves as a sole determinant of business survival in the market.
Even though the fact is that Aussies palate produces a more refined coffee compared to the genre that States offer, a series of strictly business kerfuffles existed on the part of Starbucks. According to the Bookers article of “Why Starbucks failed in Australia,” a Gartner research analyst asserted that Starbucks launched its brand too rapidly before granting Australian consumers, the opportunity to build an appetite or the brand in Starbucks.
The company also expanded to regional areas, which were majorly outer suburbs within the major cities, making the brand to be too available. The YouTube video on “Why Starbucks failed…” asserted that Starbucks possessed 87 stores in Australia, which did not last for long. The first years of Starbucks swam in a pool of massive loans that totaled up to $54 Million. In 2008, the firm faced challenging times in the economic age of 2008. This led to the closure of 600 U.S stores within the same year.
The fact that Starbucks did not satisfy the Australian taste was also a major setback for the growth of the café company. Starbuck was a sweeter coffee option compared to the native coffee taste which had won the preference margin of Australians in a long time. Within the first seven years of thriving in the Australian land, Starbucks had accumulated a loss of $105million. Moreover, the company charged more compared to local coffee in Australia.
The already thriving culture of coffee in Australia also served as a challenge to the brand in America. According to Turner (2018), the café industry of Australia was projected to expand its revenue base to over $6 billion in revenue as of 2018. The phenomenon does not come as a surprise, as Australia has a strong support of café consumption in the mills since the 1900s. When the Greek and Italian immigrants came to the continent, Australian’s were immediately introduced to the flat white- an essential ingredient of Aussie favorite which was termed the espresso.
Despite accruing such a massive challenge, Starbuck has never given up anytime soon. The company has begun to reopen its locations, though moderately. The company’s stores are still available in most capital cities, as they appear to be successful in their endeavors. Starbuck still boasts of possessing 39 locations in Gold Coast, Brisbane, Sydney, and Brisbane areas, which caters for the interest of tourists who visit the regions. However, their giant dream of possessing at least one store within the streets of U.S beverage appears to be long gone.
https://www.gizmodo.com.au/2018/07/why-starbucks-in-australia-was-a-massive-failure/
https://www.cnbc.com/2018/07/20/starbucks-australia-coffee-failure.html