Following years of relentless growth, the chain has been forced to shrink. Over the next few months, 600 of the 7,200 Starbucks branches in America are to close, putting about 12,000 jobs at risk. One man who has already lost his job is the former chief executive, Jim Donald, who was fired in January.

What has gone wrong?

Starbucks has evidently been growing too fast for its own good. Since 2004, the number of Starbucks shops has shot up from 4,000 in 20 countries to 15,000 in 40 countries. You can step out of one Starbucks shop, look down the street, and there is another. That is part of the problem: there are so many close together that they practically compete with each other. Nearly three-quarters of the outlets earmarked for closure are new ones opened since 2006. Wall Street seems to think this is a good idea. The company's share price, which had halved in two years, rallied yesterday.

How long has the firm been with us?

Given how pervasive they are, it is difficult to imagine that until 10 years and two months ago, there were no Starbucks shops anywhere in Britain, or in anywhere else in the world, outside the US. The first was opened in Seattle in the 1970s but the business took a long time to grow. As recently as 1987, there were only four shops in the chain. Its first venture into the non-American market was to buy 65 British shops from the Seattle Coffee Company in May 1998. Within less than nine years, there were 500, and a new one was opening every fortnight.

Can you get a cheap cup of coffee there?

The cheapest cup of coffee on the Starbucks menu costs about three times what you would pay around the corner in McDonald's. But curiously, you can pay less at Starbucks, if you know what to ask for – only they don't want too many people to know. Starbucks devised a brilliant solution to the classic retailers' dilemma – those who undercharge lose money, while those who overcharge lose customers. It is called the Starbucks "Short". The "Short" is an eight-ounce cup – quite enough for most people, but only two-thirds the volume of the cheapest item on the menu, the 12oz Starbucks "Tall", and correspondingly cheaper. When someone orders it, the staff don't shout out the order, as normal, but pass on the message quietly so that other people do not start asking what a "Short" is. This secret item is not only cheaper, but is said to be stronger and tastier than anything on the printed menu. It keeps the knowing customers coming back, while the casual visitors who automatically ask for the cheapest item on the menu are served the more expensive "Tall".

What is different about Starbucks, apart from the price?

The business is run on the principle that when people step off the street to buy coffee, what they really want is a place where they can feel at ease. The layout of the shop is supposed to give you "personal space". Starbucks staff are called "partners" rather than "employees". The cups in which coffee is served contain little philosophical reflections from "Starbucks customers", headed "The Way I See It". Thought No.232, for instance, begins with the observation, "You simply can't make someone love you if they don't." The company stresses its "social responsibility", to enable you to feel that when you drink its coffee, you are doing some good for a farmer somewhere in the Third World. Starbucks has a record label. Last year, it launched a book club and promoted Ishmael Beah's A Long Way Gone: Memoirs Of A Boy Soldier, a harrowing account of growing up in war-torn Sierra Leone. The subliminal message is that buying Starbucks coffee makes you an intelligent person with a social conscience.

So why does it have so many enemies?

Starbucks is to the cafeteria trade what Tesco is to retailing – the biggest, most popular, most talked-about and most hated in the business. There are websites with self-explanatory titles such as "Starbucks Gossip" or "I Hate Starbucks". Part of the company's problem is that it tries to convince intelligent, prosperous customers that Starbucks offers them something special, but the sheer number of outlets makes it blindingly obvious that this is another huge, profit-driven multinational corporation selling standard fare around the world. Ten years ago, its coffee shops looked different; now they are as common as McDonald's but much more expensive, and customers complain that instead of running book clubs and offering instant philosophy, they should serve better coffee.

Isn't it just the world economy's fault?

Mr Schultz blames Starbucks' problems on the rising price of fuel. Now that it costs so much more to fill a petrol tank, people have to cut back on luxuries, so they forego the coffee break in Starbucks, he claims. But if that were the case, all coffee houses would be struggling.

Yet Whitbread, which owns the Costa Coffee chain, reported a 26 per cent increase in profits in April, and confirmed that it still plans to double the number of Costa outlets to 2,000 over the next five years. In 2007, Starbucks held 24 per cent of the £900m-a-year British coffeee market, while Costa Coffee had 23 per cent. Now it is thought that Costa Coffee may have edged ahead. Caffè Nero, the other big player in the same market, was listed in May as being one of Britain's 100 fastest-growing companies. In the US, there is evidence that customers prefer the coffee they buy from Dunkin' Donuts, which has 6,500 outlets in all.

Where did it go wrong?

Robert Passikoff, of the New York-based market research company Brand Keys, told the US website Newsday: "They tried to migrate the coffee brand into a lifestyle brand. They came out with the movies and the books in the stores. They essentially took a step away from the core quality of the brand, which was the coffee house experience. The place didn't sound like the coffee house and didn't smell like the coffee house anymore."

Larry Miller, of RBC Capital Markets, agreed: "Starbucks has diluted its whole 'Starbucks Experience' by trying to do too many things."

It is not that people have stopped loving coffee, it seems, but a lot of coffee-lovers have fallen out of love with Starbucks.

Could this be the end for Starbucks?

Yes...

* Other coffee companies are performing well on both sides of the Atlantic. There is no general coffee shop decline.

* Some believe Starbucks has damaged its brand by not focusing on the coffee house idea. That can be hard to turn around.

* If the company's founder, Howard Schultz, cannot save it now that he has returned as chief executive, no one can.

No...

* Starbucks may be closing 600 of its coffee houses, but it still has about 15,000 in 43 countries. That's not too bad.

* Once the economic slowdown has eased, people will soon regain their thirst for a machiatto.

* Every company goes through periods of diffculty – especially ones that have grown with the speed of Starbucks.