Starbucks Coffee International, a wholly-owned subsidiary of US coffee giant Starbucks, and the Delek Group of Israel have mutually agreed to end their joint venture in Israel.

Following this decision, the joint venture, named Shalom Coffee Company, will close its six Starbucks stores in Tel Aviv. Starbucks said the decision to dissolve the joint venture has been due to on-going operational challenges in the market.

“It was a very difficult decision,” said Mark McKeon, president of Starbucks Coffee International for Europe, Middle East and Africa. “Following months of serious discussions and market reviews with the Delek Group, we came to this amicable and mutual decision. Our commitment in the market continues to be strong and long-term and we will return at an appropriate time.

“As these are still very early days of our growth, we are committed to making strategic decisions to help ensure our future success,” added McKeon. “We are very confident that the acceptance of the Starbucks brand is extremely strong, and we remain committed to our expansion plans and strategies in the region.”

Delek and Starbucks, through Shalom Coffee Co, opened their first coffee shop in Israel in late 2001 and planned further expansion. A total of 20 stores were to be opened nationwide by the end of 2002, but only six stores in Tel Aviv were eventually opened.

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By GlobalData