In July 2008, Starbucks announced that it was going to be closing 8% of its US stores. That equaled a total of 600 stores and 12,000 jobs. Although the company had initially planned to close only 100 locations, the decision was made to up the number significantly as the economy weakened further.
There are a number of reasons for Starbucks' poor performance in recent months.
Possibly the most obvious is the economic downturn that has affected almost every area of the country. With gas prices skyrocketing and the price of everything else rising fast, many just can't afford the price of a cup of Starbucks coffee, considering it something of a luxury.
There was also the issue of increased competition. As Starbucks' popularity increased and more stores were opened, the company faced greater challenges. For example, McDonald's launched their own line of premium coffees that were significantly cheaper. Even convenience stores, such as 7-Eleven, were competing with the coffee giant.
Industry experts also point out that Starbucks made a couple of common mistakes: expanding too rapidly and getting involved in non-coffee pursuits. The company had started opening new stores at a tremendous rate, prompting jokes about having a Starbucks on every corner. Plus, they began to get involved in music and other areas that had nothing to do with what the company was good at: making great coffee.
The Effects of the Closings on the Food Industry
The closings of all those locations will have a clear impact on the rest of the food industry. Although Starbucks has promised to try to find jobs at alternative locations for many of the workers, there is clearly no way they can find new positions for all 12,000 of the workers who will be laid off, especially since most locations only employ about 20 people. In fact, the cutbacks mean a reduction of the company's global workforce by about 7%, which is pretty significant.
Fundamentally, the layoffs mean that the food industry will have a sudden increase in the number of workers who are seeking employment in the field. That increase means workers in general will have less leverage and can expect lower pay and fewer benefits.
Another issue is that Starbucks' move could be an inspiration to other food industry companies that have also been taking a beating during the downturn. If other companies follow suit and start closing their locations, too, the results could be more massive layoffs and a more glutted job market in the industry.
Food Industry Employment Outlook and Trends
Despite the negative signs from the Starbucks closings, the US Department of Labor predicts that the industry will see a growth of about 13% between now and 2016. That's about average for most industries in the US economy. Because people will continue dining out in larger numbers, the service industry is expected to see the addition of more than 990,000 jobs during this period.
It is also expected to be easier to find employment in the food industry than in other fields. One of the reasons for this is high turnover. Because more than 20% of the employees in this industry are under 19 years of age, jobs tend to become available more quickly as these young people move on to jobs in other fields or abandon work for other pursuits, such as school.
Also, many workers in the field are part-time or hold restaurant jobs as a secondary source of income, so they usually do not remain in the same position for very long.
Fine dining restaurants and popular chain restaurants are likely to have their pick of workers because competition for openings will be more intense. That's because these jobs usually generate higher tips than other positions.
Another factor which may influence some parts of the food industry is the scheduled minimum wage increases. In 2008, the minimum wage will jump to $6.55 per hour (an increase of 70 cents) and will then increase to $7.25 in the summer of 2009. Although this increase may not have a dramatic effect on servers who already can be paid as little as $2.13 per hour if they receive at least $30 per month in tips, the increase may cause some fast food restaurants to cut back on staff to make up for the higher hourly wages.
Steps Employees Can Take to Secure Positions
In order to protect their positions, workers in the food industry may need to make some changes. For one, they should be sure to minimize mistakes and to be efficient. If you are a new hire doing a great job, you are more likely to keep your job than a long-term employee who has become lax about their responsibilities.
Another way to secure your position is to be flexible. With the Starbucks closings, for example, some of those laid off workers will be offered positions at other locations. If you're willing to move around a bit, you may be better able to hold onto your position. Of course, you'll have to weigh the additional travel costs of the move against the benefits of keeping the job.
Finally, you may want to consider moving into sectors of the industry with greater job security. For example, if you worked at Starbucks and saw the closings coming, you might have taken pre-emptive action and begun submitting applications elsewhere. Although many restaurants may be tightening their belts, you'll still find a good number of positions available for experienced food industry workers.
