07/12/2008 05:12 am ET | Updated May 25, 2011

Lax Real Estate Decisions Hurt Starbucks

Starbucks wants to get back to its roots to help turn around its ailing fortunes. It brought back the pioneering chief executive Howard Schultz to run the coffee chain day to day, and it has introduced a new blend, Pike Place Roast, that harks back to the location of its first Seattle store.

Yet for all the new marketing efforts, Starbucks's biggest mistakes and greatest challenges boil down to three words: location, location and location.

This week, in an announcement that surprised even analysts who have grown accustomed to bad news from Starbucks, the company said it would shutter 600 "underperforming stores," and significantly scale back plans to open new outlets.

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