8 Reasons Starbucks Failed in Australia (What did Starbucks do when they failed in Australia? + More)

Though most Australians love coffee, they are not fans of Starbucks. Read on to discover eight reasons Starbucks failed in Australia.

Most foreigners in Australia have a hard time finding a Starbucks store for their daily cup of coffee. I had a similar experience when I visited the continent. I was disappointed one day when I learned that the only Starbucks store, I could find in the region was closing down. I decided to come up with this post to explain why Starbucks failed in Australia. By the end of the post, you will also learn what the company did when it failed in this continent. Enjoy!

8 Reasons Starbucks Failed in Australia

Speedy entry

When Starbucks started expanding in Australia, it opened numerous stores in both major cities and regional locations. The speedy entry contributed to its failure since it lost its value. The company did not give Australians enough opportunity to develop a liking for the brand.

Due to the rapid establishment of numerous Starbucks stores, this coffee chain became too easily available for Australians and lost its significance. Rather than taking such an approach, the company should have taken its time to expand while considering customers’ demands.

It could have started with around 20 outlets in major cities in Australia for a few years. This could have helped them get a loyal fan base. If, for instance, the company had come up with a system to monitor purchases and reward repeat customers, it would have succeeded in Australia.

Failure to research the market

Starbucks also made the mistake of opening stores in Australia before researching the market for coffee. The company assumed that Australians would enjoy the coffee since they speak English like Americans.

Though many people in this continent love coffee, the Australian market is very different from the US market. Doing comprehensive research on the market could have prevented Starbucks from failing in Australia.

The coffee culture in Australia

The Italians and Greeks that migrated to Australia brought a coffee culture that most people in the continent embraced. When Starbucks introduced stores in the region, it failed to comprehend the Australian coffee culture. This is among the eight reasons Starbucks failed in Australia.

The Aussies do not view coffee as simply a product. For them, it is an experience. The Australian coffee culture has more to do with socializing and less to do with coffee. Most Australians know baristas in local coffee shops on a personal level and always get their coffee from them. It is hard for such customers to choose a foreign brand over a barista they have known for years.

Most Australians also meet at local cafes with their friends to relax as they enjoy a cup of coffee. When Starbucks introduced its coffee stores in this continent, it could not compete with the Australian coffee culture. If only Starbucks could have taken its time to research the Australian market before opening stores in the region, it would have understood this coffee culture.

Sugary coffee

Unlike Americans, Australians do not enjoy very sugary drinks, especially in the morning. When Starbucks established stores in Australia, it started serving sugary drinks just like it was used to in other parts such as America. Since the Starbucks coffee did not appeal to the taste buds of most Australians, many customers preferred their local cafes over this brand.

Failure to adapt to the local demands of customers contributed to the failure of Starbucks in Australia. Starbucks should have adapted most of its products to the market to prevent this.

High prices and low wages

Most Starbucks coffee drinks come at a high price. This coffee chain did not do well in Australia since most customers were unwilling to spend more for coffee when they could get the same drink from local cafes at a lower cost.

When Starbucks opened different coffee stores on the continent, it created job opportunities for Australians. The problem with this brand is that it paid low wages to Australian baristas. This is also among the eight reasons Starbucks failed in Australia.

Competition from local cafes

Though Starbucks was a famous brand, it competed with local cafes in Australia. This is because Australians had so many other options that they could choose from before considering Starbucks. Many Australians also felt that Starbucks offered a basic menu compared to what their local cafes provided.

The Great Recession

Starbucks closed most of its stores in the continent during the Great Recession in 2008. The great recession negatively affected Starbucks in the continent since most customers could no longer afford its drinks. They were also unwilling to spend their cash on a new coffee brand.

Since this was a challenging time for most businesses, Starbucks made losses on most of its stores and closed down. Only 20 Starbucks stores were left in Australia following the financial crisis. To prevent the closure of most stores, Starbucks would have considered adjusting the prices to avoid losing more customers.

Australians failed to warm up to the brand’s culture

Apart from the Australian coffee culture that we mentioned, Starbucks also has its one culture. For instance, this company customizes drinks and experiments with different flavors. Since most Australians did not get on board with the company’s culture, it negatively affected Starbucks stores on the continent.

Now that you know the eight reasons Starbucks failed in Australia, let us look at what it did when it failed.

After Starbucks incurred losses worth millions in Australia, it learned from its mistakes. It came up with a different strategy for operating coffee stores in Australia. This company has not yet given up on Australia since it has been opening stores gradually at convenient shopping malls.

The giant coffee shop has also opened stores in tourist spots to attract people who visit the continent. Positioning coffee stores strategically in Australia now enables Starbucks not to compete directly with local coffee shops.