The Latte Factor

There was an interesting article about the Starbucks' company. Now I have heard before that our personal budgets can be effected by the latte factor...meaning it is the same daily draining of our coffers that makes a difference at the end of the month. So, buying a latte each day with an average price of $3 would cost $21 a week, $84 a month, $1008 per year....wow....that is without the biscotti.

What I did not know is that Starbucks is a better predictor of the state of our economy than your financial advisor. In fact, if we had paid attention we might have been forewarned about what was coming.

In the middle of 2006 Starbucks was opening an average of 6 stores a day. By the very fact that Starbucks is considered a luxury item it is a leading indicator of our broader economy. Starbucks has anticipated the market at every bump. Starbucks stock began it's decline at the end of 2006 way before the rest of the market. Starbucks isn't really in the business of selling coffee, it is in the business of selling affordable luxury, as they themselves have said, "a 3rd place where people can gather that is not home or office." When we cut back it is not on the caffeine but where we get it...So Starbucks was the first company who had never had a negative growth to start closing stores. They started closing stores before the banks, retailers or newspapers, because they felt it first. Since they were selling us a lifestyle, they knew before everyone else that on a daily basis, one cup at a time....we weren't playing any more.