Average Joe figured out problem awhile ago
Many Starbucks customers figured out long ago what the Seattle coffee giant seems to have just realized: Opening shops too close to each other isn't good for business.
"Starbucks was stupid," Leslie Miller said yesterday between sips of a decaf outside the chain's shop at the Massachusetts State Transportation Building in downtown Boston. "They put them right next to one another."
The retired teacher's sentiments were echoed by other latte lovers following Tuesday's news that Starbucks Corp. will shutter 600 of its more than 7,000 stores nationwide through March of next year, shedding up to 12,000 full- and part-time jobs.
Seventy percent of the stores affected are less than three years old, the company said.
The company has yet to say if any of its approximately 200 stores in Massachusetts will close.
"They probably overexpanded," said Peter Hawkins, 62, a Boston University religion professor who was sipping a tall Starbucks drink at the transportation building shop. "Then there's the expense - people spend five to six dollars for your coffees and desserts."
Miller, 66, sat in the nearby food court with three friends, all of whom prefer Dunkin' Donuts coffee.
One of them, Muriel Slavet, 85, said she spends less money at Dunkin' Donuts, which is based in Canton and has about 5,800 US shops, including 1,116 in Massachusetts.
"I've already gone through [economic] depressions," Slavet said. "You've got to put money away. Starbucks is just too expensive."
Amy Osborne, 33, a graphic designer and full-time graduate student at Emerson College, said concerns about the declining economy have affected her coffee habit: She has slashed her monthly Starbucks budget in half, to $30.
"I haven't been going as often," Osborne said. "I've been making my tea at home."
Still, analysts say that while recession fears have not helped the company, Starbucks' decision to close 600 stores - instead of the 100 it previously said would be shuttered - has more to do with poor business decisions.
"It was probably the result of overexpansion and cannibalization, meaning they were taking sales from other Starbucks," Ron Paul, president of Technomic Inc., a food industry consulting firm in Chicago, said in a telephone interview.
"There's no doubt that the economy is not helping, but I think that this is a Starbucks issue more than an economy issue."
Starbucks' woes come at time when Dunkin' Donuts has been aggressively expanding and McDonald's has enjoyed success with low-cost premium coffee.
Until now, Starbucks' appetite for adding stores has been voracious - the chain had doubled in size since 2004.
The Onion, a popular satirical website and newspaper, once parodied its growth strategy with the headline "New Starbucks Opens in Rest Room of Existing Starbucks."
Starbucks and Dunkin' Donuts face off in many locations, including on Massachusetts Avenue near Berklee College of Music.
Peter Vorvis, who owns the Dunkin' Donuts there, called it a friendly rivalry.
But he isn't surprised by Starbucks' financial troubles.
"Starbucks is closing stores; Dunks is opening stores," Vorvis said. "Obviously we're the best."
Last year, 519 new Dunkin' Donuts opened across the country, according to the company.
Roland Watson, who works at Vorvis's shop, said the chain is not facing the same problems as Starbucks because of its history.
"Dunkin' Donuts has been around," he said.
"They didn't have to expand quickly."
Across the street, Starbucks employees Colleen Finnegan and Andy Smith said the company has been good about giving employees information, though it has not told them whether their store will remain open.
Postings in the store's back room include information about severance packages and what to say to customers who are upset about the impending closings, they said. "It's scary but it's good," said Finnegan, a shift supervisor.
"They're going to get rid of the stores that were cannibalizing each other."
Elizabeth Campbell can be reached at ecampbell@globe.com. Erin Ailworth of the Globe staff and Globe correspondent Angel Jennings contributed to this report. 