The Starbucks (Nasdaq: SBUX) café chain’s serious troubles are not confined to Israel. The world’s largest network of cafes is facing increasing difficulties from Zurich to Tokyo.
According to a survey in the most recent issue of ''BusinessWeek”, Starbucks currently operates in 30 countries, in addition to the US and Canada. Starbucks currently has 1,532 cafes outside of North America, amounting to 23% of the company’s total, but accounting for only 9% of its sales. All 1,532 cafes are making a net loss.
Starbucks has also recently experienced trouble on its home court. An e-mail slander campaign has alleged that the chain’s closing down of its cafes in Israel, in which it was partnered by Delek, was actually a surrender to anti-Israel pressure. It was also alleged that one company poster displayed at Starbucks sales points around the US was designed to arouse associations with the September 11, 2001 terrorist attack against the World Trade Center in New York.
The Jewish community, which includes many urban liberal professionals, almost certainly accounts for a substantial proportion of Starbucks customers in the major cities. The slander campaign therefore focused on Starbucks’ alleged surrender on Israel. The Bnei Brith Anti-Defamation League (ADL) has taken up the cudgels for the company, unjustly accused of being anti-Semitic or anti-Israel, just as the ADL defends the Jewish public against such slander. The ADL has been giving Starbucks a clean bill of health on its website for the past six weeks.
The ADL says there is no evidence that Starbucks surrendered to pressure. The ADL noted that Starbucks’ April 1 notice stated that the closing down of its operations in Israel was due solely to business considerations.
The ADL says that it contacted sources in Israel and the US on this issue, and is now convinced that Starbucks’ withdrawal from Israel was “a purely business decision.”
Published by Globes [online] - www.globes.co.il - on June 4, 2003