Rivals take advantage of mass Starbucks closing

Starbucks Training
Starbucks junkies found out they'd be deprived Tuesday afternoon as Starbucks CEO Howard Schultz said they'd close 7,100 U.S. stores to 135,000 employees.Paul Sakuma / AP
/ Source: The Associated Press

As caffeine junkies looking for their evening fix were locked out of Starbucks during the company's three-hour nationwide training session Tuesday, many didn't have to look farther than some competing cafe down the street for free or discounted cups of joe.

Dunkin' Donuts proclaimed it "wants to ensure that no coffee lover is denied a delicious espresso-based beverage" when it announced it was slashing the price of its small lattes, cappuccinos and other coffee drinks for 99 cents for most of the day.

Yet spokeswoman Michelle King demurred when asked if it was a competitive jab at Starbucks Corp.

"We are offering this promotion today because there is an opportunity to reach a large number of coffee drinkers, as well as provide our own loyal customers with a great deal," King said in an e-mail to The Associated Press.

Caffe Vita Coffee Roasting Co., a small chain with four shops in Seattle, planned to give away free espresso drinks while the world's largest gourmet coffee retailer shut its doors.

While people who frequent Seattle's locally owned independents are often quick to trash Starbucks as a soulless corporate giant, Caffe Vita marketing manager Kate Perry insisted the giveaway wasn't a swipe at the top dog.

"It's just basically us celebrating how skilled our baristas are and the consistent flavor of our coffee," Perry said.

McDonald's Corp., which has been trying to steal Starbucks customers by revamping its coffee menu, declined to comment on Starbucks' training effort and offered no special deals Tuesday.

Nearly 7,100 company-operated Starbucks stores across the U.S. — all except the licensed shops in supermarkets, airports, malls, hotels and the like — were to close at 5:30 p.m. local time so some 135,000 employees could go through about three hours of training.

Part back-to-basics tutorial, part pep rally, the teach-in aimed to reacquaint baristas with the art of pulling the perfect shot of espresso and steaming milk so the velvety foam that tops a latte has just the right thickness.

Starbucks switched to automatic espresso machines years ago, but it still takes skill to work them. Baristas have to adjust the grind to make sure a shot doesn't pour too quickly, making it watery, or too slowly, making it bitter.

"It's not as simple as pushing a button," said Ann-Marie Kurtz, Starbucks' manager of global coffee and tea education.

Starbucks wouldn't disclose how much revenue it stands to lose during the shutdown, but analysts say the financial impact will be negligible compared to charges the company will take as it closes about 100 poorly performing U.S. stores this year and pays severance to more than 200 corporate support staff it laid off last week.

U.S. stores make up the bulk of Starbucks' revenue, which totaled $9.4 billion in fiscal 2007, when the company earned more than $672 million.

Robert Toomey, an analyst with E.K. Riley Investments, said he didn't expect a surly backlash from customers getting turned away.

"It's a low-traffic time of day," he said. "The risk of ticking off customers is pretty minimal."

It makes sense to tackle the training in one fell swoop, and it shows the company — which has seen its stock slide about 50 percent since late 2006 — is committed to turning itself around, Toomey said.

"They know they've fallen short," Toomey said. "The quality of the product has deteriorated a bit over the last few years, and they know they've got to improve it."

Starbucks plans to train its international employees over the next month, as well as baristas at more than who work at the company's more than 4,000 licensed shops.