Jakarta, CNBC Indonesia – Since it was founded in 1971 in Seattle, USA, Starbucks outlets have been like a virus: they spread very quickly in a relatively short time. Now, there are 35,711 outlets spread throughout the world.
Even so, not all countries have Starbucks, one of which is Israel. Israel, which has recently become the object of anger due to the escalating occupation of Palestine, has previously been a Starbucks expansion area.
However, he didn’t live long and was only around two years old. Of course, this fact is an anomaly. This is because Starbucks, which supports Israel’s occupation of Palestine, apparently doesn’t sell well in the country it supports.
Then, why could this happen? Is there any influence from the boycott movement?
Big dream
One day in 1998, Starbucks founder Howard Schultz was on a trip to Israel. While there he stayed in the King David Hotel, Jerusalem, and was served hot coffee which irritated him.
“There’s nothing good about the coffee!” said Howard.
As a coffee maker and businessman, this feeling of irritation sparked his business instincts. Howard then had the ambition to build the first Starbucks outlet in Israel. He believes Starbucks will sell well because according to him “my coffee gives a different taste.”
Long story short, three years after that visit the first Starbucks outlet was established in Tel Aviv, Israel. Regarding store operations in the Jewish State, Howard collaborates with the petrol company, Delek Israel Fuel Corporation (DIFC), which holds 80.5% of the shares.
Thanks to collaborating with a fairly large local company, Howard believes his coffee shop will be successful. In fact, he has prepared plans for the next 4 years. Later, 80 shops will be established in Israel’s big cities.
Unfortunately, it was all just a dream.
 Photo: SpecialHoward Schultz |
Unsold & Bankrupt
According to Arturs Kalnin and Laure Stroock in “Pouring Israel into A Starbucks Cup” (Cornell Hospitality Quarterly, 2011), a few months after Starbucks launched its sales immediately collapsed.
“Sales were very poor and the entire store was empty,” they said.
As a result, not a single shop recorded a profit. Everyone loses. Kalnin and Stroock noted that Starbucks’ losses from its inception in 2003 reached US$ 6 million or the equivalent of Rp. 93 billion today.
Practically, this impact caused store operations to stagnate. Many employees were fired. The Starbucks boss’s dream of opening 80 stores is difficult to realize. In fact, the existing Starbucks outlets collapsed one by one.
Until finally, the peak occurred in 2003. The largest coffee franchise in the world officially went bankrupt and left Israel. For a well-known coffee shop, 2 years is considered very short.
In Kalnin and Stroock’s analysis, there are at least 3 reasons for bankruptcy.
First, failure to choose business partners. In Israel, Starbucks collaborated with the DIFC gasoline company which had absolutely no experience in the food and beverage industry.
Second, Howard Schultz is too confident. According to him, high self-confidence in business can have fatal consequences for the development of the business itself. Moreover, Howard once boasted that he wanted to open 80 stores in Israel in the first 4 years without knowing the existing situation.
Third, external factors. This refers to the political and social situation of Israel. At that time, Starbucks was present when the situation was deteriorating due to the emergence of the Second Intifada Movement.
One of the impacts is the spread of terror and other crimes. Of course this has an impact on the development of Starbucks which cannot expand to other cities. Since its inception, the coffee shop has only been in Tel Aviv.
Well, the problem is that in Israel’s capital there is a legendary local coffee shop, namely Arcaffe. As a result, Starbucks lost. So, indirectly the Palestinian resistance movement brought Starbucks to its knees.
Not only that, the Haaretz media site also explains other external factors, namely differences in coffee drinking culture. Israelis apparently don’t like Starbucks’ menu presentation and coffee-making methods.
In the end, Starbucks’ bankruptcy in Israel became a black mark on the coffee shop’s history.
[Gambas:Video CNBC]
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