Dunkin' Donuts, Other Stores Profit as Starbucks Close Nationwide

Starbucks Recently Announced it is Stopping Sales at 600 Stores: Some Basic Facts and Possible Causes

For awhile, in our city and many others, it seemed like there was a Starbucks coffee shop on every corner. In fact, a former staple of our neighborhood, Dunkin' Donuts, lost so much business after Starbucks arrived in the same mall that it finally shuttered its doors. For years, the new, gorgeous Starbucks was crowded with people coming in for their daily fix of the coffee of the day, from cafe lattes to plain coffee, black, no cream. It was a bustling place. Company meetings even took place there.

Now Starbucks management has recently announced that it is closing 600 stores and business analysts and others are wondering what hit the company so hard. Did the coffee shops grow too quickly? Were there too many stores on every corner? News of the announcement about the Starbucks' closings can be seen in such publications as The Washington Post's July 2 online edition in an article called "In Venti Retreat, 600 Starbucks to Close" (see full listing of sources at the end of this article). Most of the stores closed were those opened after 2006. Perhaps opening those stores was a big "ooops" moment in Starbuck's management history.

For those who may still wonder why and how this could happen to a coffee company that once had some of the trendiest coffee shops around, here is some basic info about what happened and, possibly, why:

The pressing question: why did Starbucks close and why has Dunkin Donuts become profitable again, even in areas where Dunkin' Donuts was once forced out?

This writer has witnessed this phenomenon personally, having seen a local Dunkin' Donuts lose business when the giant Starbucks drew crowds. As long as the economy was booming, Dunkin' Donuts had to quietly shut its doors and leave, not able to make a profit next to the booming Starbucks. That particular Dunkin' Donuts was located literally across the parking lot from a Starbucks in Indianapolis, Indiana. It was a Dunkin' Donuts we frequented.