As recently as two years ago, Starbucks executives talked confidently of eventually opening 40,000 stores worldwide – a staggering rate of growth for a chain that had only four stores in 1987.

But Seattle-based Starbucks, one of Washington’s iconic companies, isn’t talking like that anymore. What goes up must come down. Not even Howard Schultz can escape gravity.

Those hard facts were demonstrated in brutal fashion Tuesday when company founder Schultz announced that 600 stores in the U.S will be closed this summer, affecting as many as 12,000 workers.

Schultz blamed the faltering U.S. economy, saying that the brunt of the closures will fall in the places hit hardest by the mortgage crisis. And consumers worrying about $4.35-a-gallon gas and higher food bills aren’t as eager to shell out for a double tall latte.

But there’s more to it than that. Starbucks was growing too fast for its own good. Skeptics have wondered how long the company could continue packing new stores so closely in some cities that coffee addicts could choose between two or three stores within a couple blocks.

Schultz and other believers insisted that the new stores wouldn’t cannibalize business from existing stores, but too much of a good thing almost always becomes too much of a good thing.

Starbucks also made a wrong step with its move into merchandising, trying to boost revenue with sales of music, movies and books. As one market researcher puts it, “Starbucks stopped being just a coffee shop and became a confusing mess of things for sale.”

For a decade, Starbucks had a magic formula, its stock was golden, and Schultz became a billionaire. Now the stock is dragging, and Schultz is struggling to recapture the company’s momentum. Starbucks even trails Dunkin’ Donuts and McDonald’s in market share for U.S. coffee sales.

If there’s a moral to the story, it’s that economic competition is brutal, and staying on top takes constant work and innovation. McDonald’s – another company synonymous with ubiquity – has had to reinvent itself more than once to maintain profits.

It’s far too soon to write Starbucks’ obituary. Schultz may yet find a course that returns the company to prosperity. But for now, he’s facing a venti challenge.