STARBUCKS, YOU GOTZ SOME PROBLEMS

Standing in front of industry analysts two years ago, Starbucks executives gleefully proclaimed that the coffee chain's rapid-fire expansion was so successful, it could even support two outlets in one building. Not only that, executives bragged, but the brand was so strong it could be used to sell everything from Scrabble boards to breakfast sandwiches.

Company executives now freely admit that such thinking is largely to blame for the woes that led to Tuesday’s announcement that Starbucks will close 600 U.S. stores and eliminate thousands of jobs. The coffee giant’s missteps have come at a spectacularly bad time, hitting as the economic slump deepens and consumers are seeing their discretionary spending eaten up by rising gas prices and grocery bills.

If economic woes continue, things could go from bad to worse for Starbucks. Some customers might decide that high-end coffee is no longer an affordable luxury at all, while others might increasingly turn to cheaper alternatives offered by McDonald’s and Dunkin’ Donuts — companies that have taken aim at troubled Starbucks.

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