If there's an uncertain stock on Nasdaq, it is Starbucks corp.( NASDAQ:SBUX ). What's happening with Starbucks is that people DO believe Schultz will bring back the company as it was before its fall but they DON'T want to make the first move, in case Mc Donald's ( NYSE:MCD ) wins the lattes war against Seattle's giant. This is a misunderstanding of the two companies ; each has its own customers base:
Two different markets
A recent market study orchestrated by Hitwise showed that Mc Donald's customers earn less than 50 000 dollars a year when Starbucks clients earn more than 60 000 dollars a year! Beyond this point, if people are willing to pay 4,80$ for a grande latte, they also want a brand experience. Starbucks offers them a big place with sofas and fresh design and good music ( they have their own music label " Hearmusic " , that has produced CDs of Paul McCartney, REM, Jack Johnson, Willie Nelson, etc.). I'm not sure that Mc Donald's can offer the same experience, think about a barista calling " a grande nonfat latte with a big mac extra cheese " in a restaurant that smells of meat all over the place...
Starbucks and McDonald's are just not competing for the same market at all!
But here's a good reason why people should care about sbux stock: The company was multiplying stores all around the world when, at the same time, Arabica growers told the world they won't fill the demand ! All over the planet, more coffee shops open than ever before and using the best grains on the market, usually Arabica ones. ( forget about dunkin donuts Robusta coffee that taste anything but water... we're in a new era!) Just in
If Starbucks really listen to its Arabica growers, it will guarantee customers some quality in their cup and maybe stop costs raises
Why I believe in Starbucks
Sbux is at a low of 15$ per share. At the same time, Schultz is promising lots of things to bring investors back in the game: As I was in New-York, I stopped by a Starbucks and ordered an espresso. I didn't really like it and told a barista about it( it was the first time my sbux espresso taste very bitter) , and after he apologized for it and gave me an other one, he told me that by 2011, every Starbucks will have a new espresso machine!
Starbucks standards have also changed. Schultz wants his coffee to be the best in
Well, what's important it's that standards have evolved since that; milk has to be steamed only once, while
Finally, I think what Starbucks needed to do was to remember where the coffee experience started, in a fine coffee shop in
Next wednesday, april 30, Starbucks will have its earnings conference call for its second financial quarter. Here's a good way for those who want to figure out if the stock will go up or down.