CA - Nobody Goes To Starbucks Anymore (It's Too Crowded)
2024-06-24 09:10:35 ET
Summary
- Starbucks is facing challenges due to cautious customer spending, leading to a drop in foot traffic and same-store sales.
- Howard Schultz criticizes current management for operational hiccups and decline in customer experience focus, urging a return to the "founder's mentality".
- Despite short-term setbacks, Starbucks remains a true "EVA Monster" with a wide economic moat and attractive total return potential.
What’s going on with the company?
It has become apparent that, like many of its peers in the premium/luxury goods sector, Starbucks could not remain immune to the bleak overall macro picture. Cautious customer spending has spread from high-end purchases like $100,000 Porsches and $10,000 leather bags to small-ticket items such as $10 customized beverages, leading to a staggering drop in foot traffic and same-store sales for Starbucks both globally and on its home turf. It is clear that the market has become price sensitive even in the most developed region of the world, and we remain cautious about the extent to which management can rely on price increases in the coming years. As you will see, despite its expanding global footprint, Starbucks’ U.S. operations are still crucial for incremental value generation, so turning the ship around in its most mature region requires immense management attention....
Nobody Goes To Starbucks Anymore (It's Too Crowded)