Losses double at coffee company

COSTS associated with the closure of more than 20% of Starbucks’ Irish outlets contributed to pre-tax losses which more than doubled last year.

Filed accounts for the Irish operations show the number of Starbucks coffee shops was cut from 23 to 17 last year, leading to an increase in pre-tax losses of 102%, from €1.62 million in 2009 to €3.28 million in the 53 weeks to October 3, 2010.

It is estimated that the closures contributed to a 10% decline in sales, from €18.1m to €16.1m and a loss of 46 jobs, as staff costs fell from €6m to €5.1m.

The stores closed by the US-owned company were all Dublin-based and included sites in Ranelagh, Dalkey, Tallaght, Dundrum and Swords.

Thirteen of the company’s remaining 17 Irish outlets are in Dublin, including two at Dublin Airport.

The Irish loss includes royalties and licence fee payments of €875,303 to the Seattle-based parent.

The company’s operating losses increased by 143% from €1.1m to €2.88m, with interest payments last year of €286,806 adding to last year’s losses.

However, Starbucks’ underlying business performance last year was an improvement on 2009.

In the accounts, the directors state: “In spite of continuing challenges in the wider economy, these accounts reflect a period in which management continued to make progress towards improving the overall health of the business by focusing on improving the customer experience, investing in its [employees] and driving efficiencies throughout the operating structure.”

They added that “the tough measures taken this year will deliver future improvements in the financial performance of the business”.

Starbucks has 16,858 stores worldwide, employs 137,000 people and last year had total revenues of $10.7bn (€7.4bn).