Taking a Clue from Starbucks

Author: Kari

Simple economics.  The executives at Starbucks seem to know how it works. Not so much for NJ legislators.

Starbucks announced this month that it is closing 600 of its US stores.  This is due to several factors regarding the unprofitability of those stores – a slow economy and more importantly, overagressive expansion.  At least 420 of said stores have been opened within the past two  years, while Starbucks has opened around 2211 stores in that time period.  That’s an agressive expansion for a company who already has an enormous quantity of stores in this country and whose products are location-specific; they are high-end products that sell mostly to people who can afford high-end products.  Starbucks stores will not perform well everywhere because of these factors, and that is what happened.  The moral of the story is that Starbucks realized they made poor management decisions during this expansion and in order to rectify the situation, is closing stores and taking a hit.

It’s time for NJ legislators to take a clue from a company who operates, very successfully may I add, in the free market.  When you have made poor decisions and your economy suffers from those decisions, you fix the problem because you have to. You don’t borrow money and worry about what happens later. If you don’t fix the problem, you go out of business, plain and simple. In NJ, we just keep postponing our bankruptcy threshold by borrowing and spending money with reckless abandon. It’s already caught up to us in the form of absurdly high taxes, and it will only get worse if we don’t fix the problem.

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