Starbucks' New Coupon Giveaway: Disappointing on Several Fronts

Mar. 2.07 | About: Starbucks Corporation (SBUX)

According to the Seattle Times (via AZ Central):

Every year around this time, Starbucks (NASDAQ:SBUX) sends its shareholders a little gift along with its annual report and proxy. The past five years, Starbucks sent a gift card for $3.50, enough money to buy a latte. Previously, it was a coupon for a free drink of their choice.This year, shareholders are opening the envelope to find a coupon good for two coffee-drip drinks. Starbucks says it wants people to bring a friend or family member along and then write about their experience at www.mystarbucksstory.com.

The new coupon also happens to cost less. Last year, Starbucks spent roughly $1.4 million for gift cards to about 400,000 shareholders. By giving away cheaper drip coffees, the company will save hundreds of thousands of dollars.

With the stock down significantly of late, this is likely to prove annoying. If Howard Schultz is serious about wanting Starbucks to regain its community feel, he will consider the fact that many shareholders collect the gift cards, getting use from them beyond the $3.50 initial take.

Further, what’s the idea of bringing a friend? Do they think anyone who really enjoys Starbucks knows someone who is a virgin to the concept? As Starbucks shareholders, we considered the gift card to be our dividend. And we are annoyed both at the fact that the initial value is lower and that we will lose the residual “collectible” value.

We expect better next year, Howard.

Disclosure: author owns SBUX shares.

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