Upon closer investigation of the Starbucks dilemma in South Africa, it can be concluded that there are a multitude of reasons as to why they are not as successful as they would like to be. The following is a brief summarization of the current situation for Starbucks in South Africa. Taste Holdings, the local license holder for Starbucks in South Africa, has withdrawn from their dealings with Starbucks and their other food companies, and they have sold their 13 Starbucks locations for 7 million rand or about $464,000. They have retreated to their dealings with luxury jewelry and watches in order to focus on what they perceive as healthier and more secure markets. The reason for this shift is because their investment did not pay off. Originally, Taste Holdings wanted to open roughly 200 locations throughout South Africa, but they only managed to open 13. These alone have not been sufficient enough to provide a return
on the initial investment. Even if more were opened, they would still be in the negative. Each location was coming out positive when taking annual earnings into consideration, but that was not enough to provide returns on all investments. Having to pay a portion of their earnings back to Starbucks was also a big financial hit to Taste Holdings, and it proved to be a massive source of stress for them. To summarize, the three primary reasons for Starbucks current situation in South Africa would be ridiculously high startup costs for each location, percentages to be paid back to Starbucks causing a financial burden for Taste Holdings, and unreasonable prices that were bested by local competitors at each location. These are only three of the more central issues with Starbucks in South Africa, and there was definitely a collection of smaller, contributing issues that were not addressed within a reasonable period of time.