Home / FINANCE / Retail / Starbucks blew $750 million on stores that are now shutting — and it’s a shining business pierce (SBUX)

Starbucks blew $750 million on stores that are now shutting — and it’s a shining business pierce (SBUX)

Starbucks teaAs Starbucks shutters Teavana stores, it is still pulling tea sales.Starbucks

When Starbucks announced final week that a association skeleton to tighten all 379 of a Teavana stores, it was easy to call a company’s 2012 acquisition of a tea sequence for $620 million a failure. 

And, as Nation’s Restaurant News’ Jonathan Maze points out, this is distant from a initial time that Starbucks has found itself shuttering a bondage it has acquired.

In 2015, Starbucks announced it would shutter all locations of La Boulange Bakery (acquired in 2012 for $100 million). And, progressing this year, a association sealed a final two Evolution Fresh locations (acquired in 2011 for $30 million). 

Closing roughly 400 store after spending $750 million creates it seem as yet Starbucks is draining money. However, there’s some-more to a story than these total show.

Each of a acquisitions highlights Starbucks’ efforts to mangle into a new difficulty — health food, bakery, tea. And, given a acquisitions, a sequence has mostly succeeded in a efforts to grow sales in these sectors. 

Starbucks reported final week that it is on a path to sell some-more than $1.6 billion of Teavana-branded beverages globally in 2017. Starbucks’ tea business has grown 40% given rising Teavana, with sold success in China and Japan. In July, a sequence launched a new Infusions line, done with steeped fruit and botanical blends total with Teavana iced tea. 

StarbucksREUTERS/Kim Hong-Ji

La Boulange was a squeeze dictated to assistance Starbucks boost a food sales, a notoriously diseased partial of a chain’s business. Food creates adult 19% of total revenue during Starbucks, a figure that has hold solid given 2011, definition food accounted for some-more than $4 billion in income in 2016. According to a company, food sales have increasing by 50% given a purchase.

While Starbucks is looking elsewhere to beef adult a food menu, announcing a partnership with Italian bakery Princi in 2016, La Boulange helped pave a approach toward Starbucks’ idea to double a food sales by 2021. 

As Maze points out, appropriation these bondage costs money. And, maybe Starbucks could have increasing tea and food sales though these acquisitions.  

However, when perplexing to grow multi-billion dollar segments of a business, Starbucks can means to shiver stores in preference of building brands. It competence not be a many fit approach to do business — though judging a acquisitions a disaster formed on store closure misses a plan behind a purchases. 

Starbucks doesn’t have a financial inducement to grow bondage other those underneath a possess Starbucks name. Each of these brands are purchased to urge Starbucks’ repute and sales. Their particular success or disaster is irrelevant. 

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