fredsbdo

Starbucks is Struggling for Renewed Success

interesting article,but I can not agree with it.I too do not see Sbux customers going to MCD for a cheaper coffee drink,that's ridiculous and dunkin donuts a competitor? NO Way, the donut crowd is much different.
What can sbux do?terminating all of those top heavy management positions was a good move.Getting rid of the breakfast sandwiches was a good move.The managers that I have interviewed all tell me that they throw out about 25 % of the sandwiches because they can't sell them before the exp date.This was one of their poorly planned endevors.They have no freezers so they get their sandwiches premade and refridgerated and must sell in two days.The only time of day to sell them is in the morning.....then the investment of the ovens ,promo material,training.I think that they should stay with what they are successful and that is beverages and that is where the profit is.
Speaking of profit,besides the money that they lost on the breakfst fiasco,the price of milk has gone up about 50% in the last 2 years,since has come down a little the last two months.The soy milk has done pretty much the same. Coffee,chocolate,and all of their packaging has gone up by about 15% in the last year.Wages have gone up about 10%. Leases on the new locations in prime areas are double what they were 5 years ago.These are their challenges.The customers continue to come in,I do not know what their customer counts are but when I go to sbux I continue to stand in line just as I have done for the last several years.
I see that their profit margin has shrunk considerably and since they make less per customer,they need more customers for more profit.They cannot raise their prices anymore at this time.I think that most stores are maxed out on handling more customers and I think that the only growth is new stores and the international arena will help them greatly.
When the commodity markets finish their run and the markets consolodate,and milk,coffee,and soy milk come down in price,that will contribute to the bottom line as will the fact that they will not be paying for breakfast sandwiches and wraps that they just throw out.Perhaps,the stores can handle more business in the morning if the baristas and the cashiers are not warming and wraping the sandwiches that they are not throwing out.
I am a shareholder in SBUX and MCD.I think that this is an excellent time to buy shares of SBUX.I say that SBUX is the leader in their industry and they will continue to lead.I continue to buy shares of both SBUX and MCD.I say that they will meet the challenge of rising prices ,competition,and operations.I also say that they have a solid customer base and that SBUX will just have to figure out how to make the most profit from these customers.