Although relatively expensive for the size of society in developing countries, including Indonesia, the coffee that Starbucks sells still has a lot of fans. It’s almost hard to find an empty Starbucks cafe seat without visitors.
Reported from CNBCThursday (23/6/2022), armed with success in many countries as well, Starbucks confidently entered the Australian market and opened its first store in 2000.
In the first few years of opening, Starbucks was even slack in their investment in Australia. Dozens of outlets were immediately operated, hoping to get big profits quickly, some cafes were even built in strategic locations.
Peak in 2008, Starbucks in Australia has reached 90 cafe outlets. That is, there are 90 new outlets in just 8 years.
But it’s not a profit, the investment of this United States company always fails. Not many visitors come to their cafe.
The company announced that many outlets generate very little revenue and cannot cover operating costs.
In 2008, the company finally decided to close 70 percent of its stores in Australia due to lack of buyers. At that time, Starbucks was recorded only leaving 23 outlets across the continent.
Many people think that the growth of Starbucks outlets is too fast and hasty, but it is not matched by the increasing popularity of its coffee products.
“When they launched they opened up too fast and too many. Starbucks didn’t give Australian consumers the chance to really taste their coffee,” said Thomas O’Cornor, retail industry analyst at Gartner.
The main cause of failure
Compared to other countries where Starbucks is quite successful, Australians have a very high coffee appetite. The culture of drinking coffee has been deeply embedded in the minds of Australians.
Most Australians are also very familiar with the taste of coffee. Each coffee shop in the country has its own distinctive taste.
In addition, Australians generally find it difficult to move from one coffee shop to another if they already like coffee and it fits their taste. That’s why baristas and coffee owners in Australia are quite familiar with their customers.
This is inseparable from the Australian coffee drinking culture that has been built for hundreds of years. At the beginning of the 20th century, the Australian continent had thousands of immigrants from Italy and Greece who also brought coffee drinking culture from their home countries.
It was then that these immigrants introduced espresso, the coffee most favored by whites in Australia to date. In addition, many Australians also like specialty coffee.
Since the arrival of immigrants from the Mediterranean country, coffee shops have sprung up in every corner of the city. With so many coffee shops, there was fierce competition between coffee sellers in the mid-1900s.
It was this culture that had lingered in the minds of Australians for so long that Starbucks management did not understand at the time. Moreover, Starbucks sells more coffee with a sweeter ‘American’ taste than serving coffee that suits Australian tastes on their menu list.
The mistake of selling coffee that does not match the market’s taste, the strength of local players, coupled with the price of a cup of coffee which is more expensive than local coffee shops, makes Starbucks outlets always empty of buyers.
As a result of this error, in its first seven years in Australia, Starbucks accumulated a loss of US$105 million, forcing the company to close 61 locations.
But Starbucks hasn’t given up on Australia. Since closing its cafe in 2008, the company has slowly opened more locations by selling coffee variants that are easily accepted by the local market.
Failing to reach out to local Australians doesn’t mean the taste of the coffee isn’t liked by foreigners. Several Starbucks outlets in big cities still survive because they are targeting foreign tourists and immigrants from Asia.
Currently, Starbucks has 39 outlets in Australia’s largest cities, such as Sydney, Gold Coast, Melbourne and Brisbane.
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