SBUX - Starbucks Corp

[rkbabang]

I wonder to what extent the management of Starbucks (and the rest) consider the threat that co-working poses to their business. When I first heard about the money WeWork was raising, I liked mocking the concept as a private starbucks club. But having now been to several LA-area co-working spaces for meetings, I'm seriously interested in joining one myself. They compare quite favorably to the vagrant carrousel I inevitably observe any time I wind up at Starbucks in the city.

 

To tie it into my earlier comments, it just seems like Starbucks is facing adverse selection issues on two different fronts. People who truly care about coffee quality are going to select out of the Starbucks population in favor of more hipsterish locations, and people who care about atmosphere/class/dignity are going to just pay $500 a month to go somewhere where the bathrooms aren't being used as showers by the less fortunate. This seems like a process that doesn't bode well for the future "feel" of Starbucks. The entire brand depends on that feel, I think.

 

Not at all saying Starbucks is a short (yet), but it isn't a company that I'm confident about the 2026 prospects for.

 

Hmm... I don't know that that is a threat. I just don't really think that Starbucks is a premium brand or that their consumers are particularly high end customers. I think high end coffee, I think Blue Bottle, Intelligencia, Stumptown, obscure single origin blends shipped from Japan. Starbucks isn't really a strong player in this space -- I think it's kind of like comparing Johnny Walker to single malt scotch. Both can do fine and they don't really serve the same market segments, and selling Johnny Walker is probably a much better business then selling single malt scotch. Starbucks could loose in cities like SF or NYC and still dominant market like Concords, New Hampshire or Manilla and be fine.

 

You can get excellent coffee in New Hampshire, just not at Starbucks.  It isn't as much about the beans as it is how they are roasted.  Starbucks, like most high volume roasters, burns their beans.  The best coffee I've ever had in my life comes from a small coffee roaster in Salem, New Hampshire.  I buy my beans from them and make it at home.  I like the Sumatra or Dragon Blend, but everything I've ordered from them has been excellent, go with the vienna roast.  Order a few pounds from them mail order, they will ship it the day they roast it, you can thank me later.

 

http://coffeeroastersnh.com/

 

I've never understood what the fascination with Starbucks is.  Even Dunkin Donuts has better coffee.  I sometimes think people just like walking around and being seen with the Starbucks cups in their hands.  It's more about a brand then it is about the coffee.

 

 

[DCG]

Dunkin Donuts coffee is gross.

 

 

I think you're putting too much emphasis on their coffee though. Starbucks is a chain of cafes more so than a coffee company IMO. While there are obviously differences in roasting processes, coffee is largely a commodity. Starbucks has succeeded by creating a good cafe environment and providing consistently good service.

 

[rkbabang]

Dunkin Donuts coffee is gross.

 

I agree, but Starbucks is worse.  When I said that even DD has better coffee, it was like talking about a mexican place and saying that even Taco Bell has better burritos.  It wasn't a recommendation of Dunkin Donuts.

 

[DCG]

yeah, I'm not really a fan of Starbucks coffee either. You can often get better coffee at a gas station. I do like Starbucks' espresso drinks though.

[petec]

I hate coffee.  But everyone I know who goes to Starbucks goes for the coffee.  I don't know anyone who goes for a sandwich, or the internet.  Over time, if the coffee is worse than at the artisan place next door, Starbucks will suffer.

 

Dunkin Donuts coffee is gross.

 

 

I think you're putting too much emphasis on their coffee though. Starbucks is a chain of cafes more so than a coffee company IMO. While there are obviously differences in roasting processes, coffee is largely a commodity. Starbucks has succeeded by creating a good cafe environment and providing consistently good service.

[benhacker]

I don't know anyone who goes for a sandwich, or the internet.  Over time, if the coffee is worse than at the artisan place next door, Starbucks will suffer.

 

You know one now.  :)

 

This statement is amusing to me because I think it's probably 50/50 of the folks I know.  Maybe it's just demographics or region or something.

 

Many many folks go to coffee shops to work in my locale.  Students are a big group, white collar, remote workers or folks who work from home and like to get out.

 

My 2 cents, all anecdotal of course.

[CorpRaider]

A.  Dunkin is the shiz.  See, SJM earnings reports.

 

B.  My wife used to make me take her to get Cake pops.

[rkbabang]

A.  Dunkin is the shiz.  See, SJM earnings reports.

 

B.  My wife used to make me take her to get Cake pops.

 

DD coffee isn't good, but for anyone who grew up in the Boston area or its burbs it is like comfort food, brings back memories.  I walked into school everyday with a DD coffee in my hand in high school.  I'd meet my friends there before school, and more often then I should admit, we'd sit there and decide not to go and we'd head out somewhere else for the day.

 

Also my Dad owned a construction company and I'd work for him all summer.  The first thing we'd do when leaving the house at 5:30am was stop at DD for coffee, he'd buy himself one, me one, and one for every guy in the crew we'd be working with.  He'd always show up with coffee for all his workers. And at 9:30AM he'd send me out to buy more for everyone.

 

[Picasso]

The big wake up call for me regarding Starbucks was during my short stint living in DTLA.  There's this super hipster intersection where I lived at 6th and Spring.  Downstairs had one of those hipster coffee places where most people went.  I couldn't believe how much those guys charged and they had the worst freaking customer service about things. 

 

Then Starbucks put up a sign that they were opening across the street.  All the downtown folk were complaining about it and we all thought how dumb it was to open there.  But when it did open, man, that place sucked all the business from coffee shops down the street.  There's something to be said for going to Starbucks and knowing what you're getting and having a homogenous experience across different geographies.  All these hipster coffee shops just never stood a chance.  Some days you'd get bad coffee, other days good, they never seemed as sanitary, etc.  But you knew what you got when you went to the Starbucks.

 

I should have bought SBUX back then but it was never a cheap stock except for 2008/2009.

[enoch01]

The big wake up call for me regarding Starbucks was during my short stint living in DTLA.  There's this super hipster intersection where I lived at 6th and Spring.  Downstairs had one of those hipster coffee places where most people went.  I couldn't believe how much those guys charged and they had the worst freaking customer service about things. 

 

Then Starbucks put up a sign that they were opening across the street.  All the downtown folk were complaining about it and we all thought how dumb it was to open there.  But when it did open, man, that place sucked all the business from coffee shops down the street.  There's something to be said for going to Starbucks and knowing what you're getting and having a homogenous experience across different geographies.  All these hipster coffee shops just never stood a chance.  Some days you'd get bad coffee, other days good, they never seemed as sanitary, etc.  But you knew what you got when you went to the Starbucks.

 

I should have bought SBUX back then but it was never a cheap stock except for 2008/2009.

 

Great anecdote and is consistent with my observations living up and down the east coast the past 15 years.  I've probably looked seriously at buying Starbucks a dozen times during that same period, and have never pulled the trigger.  It never got "cheap" enough for me.  My wife and I also happen to be addicted to their products.  I am a moron.

[DCG]

The big wake up call for me regarding Starbucks was during my short stint living in DTLA.  There's this super hipster intersection where I lived at 6th and Spring.  Downstairs had one of those hipster coffee places where most people went.  I couldn't believe how much those guys charged and they had the worst freaking customer service about things. 

 

Then Starbucks put up a sign that they were opening across the street.  All the downtown folk were complaining about it and we all thought how dumb it was to open there.  But when it did open, man, that place sucked all the business from coffee shops down the street.  There's something to be said for going to Starbucks and knowing what you're getting and having a homogenous experience across different geographies.  All these hipster coffee shops just never stood a chance.  Some days you'd get bad coffee, other days good, they never seemed as sanitary, etc.  But you knew what you got when you went to the Starbucks.

 

I should have bought SBUX back then but it was never a cheap stock except for 2008/2009.

 

Great anecdote and is consistent with my observations living up and down the east coast the past 15 years.  I've probably looked seriously at buying Starbucks a dozen times during that same period, and have never pulled the trigger.  It never got "cheap" enough for me.  My wife and I also happen to be addicted to their products.  I am a moron.

 

 

I was close to buying it at around $22/share back in 2008, but of course didn't pull the trigger either. Seems like it could still be a decent buy now though.

[enoch01]

The big wake up call for me regarding Starbucks was during my short stint living in DTLA.  There's this super hipster intersection where I lived at 6th and Spring.  Downstairs had one of those hipster coffee places where most people went.  I couldn't believe how much those guys charged and they had the worst freaking customer service about things. 

 

Then Starbucks put up a sign that they were opening across the street.  All the downtown folk were complaining about it and we all thought how dumb it was to open there.  But when it did open, man, that place sucked all the business from coffee shops down the street.  There's something to be said for going to Starbucks and knowing what you're getting and having a homogenous experience across different geographies.  All these hipster coffee shops just never stood a chance.  Some days you'd get bad coffee, other days good, they never seemed as sanitary, etc.  But you knew what you got when you went to the Starbucks.

 

I should have bought SBUX back then but it was never a cheap stock except for 2008/2009.

 

Great anecdote and is consistent with my observations living up and down the east coast the past 15 years.  I've probably looked seriously at buying Starbucks a dozen times during that same period, and have never pulled the trigger.  It never got "cheap" enough for me.  My wife and I also happen to be addicted to their products.  I am a moron.

 

 

I was close to buying it at around $22/share back in 2008, but of course didn't pull the trigger either. Seems like it could still be a decent buy now though.

 

Thanks, but I'm good.  My current positions rely on application of the rule of law in the U.S. and a "retailer" run by an Ayn Rand acolyte.  Feeling good.  Why would I waste my time owning a company that sells addictive products that all their customers love?

[Jurgis]

I think I'll beat you on this one Picasso. ;)

 

Nineties. Possibly 1996 or so. A friend who I knew was great trendspotter was visiting in So Cal. Said, "we should go to Starbucks, it's the place". Shoulda bought then and there. In reality, never bought it.

 

Lessons? If you have friends who are really good at trendspotting in early stages, hang on to them for your life. Listen, buy and get rich.

 

I'm not a trendspotter.

[DCG]

 

They have plans to open a new upscale chain of cafes:

 

 

http://money.cnn.com/2016/07/14/news/companies/starbucks-upscale-chain/index.html

 

 

It seems like we've heard rumors of this type of thing in the past that didn't go anywhere.

 

 

They also invested in an Italian bakery: http://finance.yahoo.com/news/starbucks-invests-italys-princi-boutique-221857167.html

 

 

[fareastwarriors]

Starbucks’ Schultz Will Step Down as CEO, Replaced by Kevin Johnson, Current COO

https://www.bloomberg.com/news/articles/2016-12-01/starbucks-schultz-will-step-down-as-ceo-replaced-by-johnson

[giofranchi]

"Soda and Junk Food" by Gary Shilling (in attachment).

 

Do you think it is relevant for Starbucks as well?

 

Cheers,

 

Gio

Soda_And_Junk_Food

[giofranchi]

You can get excellent coffee in New Hampshire, just not at Starbucks.  It isn't as much about the beans as it is how they are roasted.  Starbucks, like most high volume roasters, burns their beans.  The best coffee I've ever had in my life comes from a small coffee roaster in Salem, New Hampshire.  I buy my beans from them and make it at home.  I like the Sumatra or Dragon Blend, but everything I've ordered from them has been excellent, go with the vienna roast.  Order a few pounds from them mail order, they will ship it the day they roast it, you can thank me later.

 

http://coffeeroastersnh.com/

 

I've never understood what the fascination with Starbucks is.  Even Dunkin Donuts has better coffee.  I sometimes think people just like walking around and being seen with the Starbucks cups in their hands.  It's more about a brand then it is about the coffee.

 

The image in attachment is from "Onward".

Do you think it is just rubbish or simply not true?

 

Cheers,

 

Gio

SBUX_Coffee

[rkbabang]

You can get excellent coffee in New Hampshire, just not at Starbucks.  It isn't as much about the beans as it is how they are roasted.  Starbucks, like most high volume roasters, burns their beans.  The best coffee I've ever had in my life comes from a small coffee roaster in Salem, New Hampshire.  I buy my beans from them and make it at home.  I like the Sumatra or Dragon Blend, but everything I've ordered from them has been excellent, go with the vienna roast.  Order a few pounds from them mail order, they will ship it the day they roast it, you can thank me later.

 

http://coffeeroastersnh.com/

 

I've never understood what the fascination with Starbucks is.  Even Dunkin Donuts has better coffee.  I sometimes think people just like walking around and being seen with the Starbucks cups in their hands.  It's more about a brand then it is about the coffee.

 

The image in attachment is from "Onward".

Do you think it is just rubbish or simply not true?

 

Cheers,

 

Gio

 

 

The first part about their beans maybe true.  But as I said above the roasting is more important than the beans themselves.  You can start with the best beans and ruin them in the roasting process.    You can say that you roast the beans longer than others, and it may even be true (some companies are probably worse), but you can't hide the burnt taste.  Of course most people who go to starbucks for their Mocha-caramel-pumpkin-spice-raspberry-hazelnut latte with extra sugar and whipped cream aren't going to notice the quality of the coffee.  But I usually drink my coffee or espresso black with nothing added and I notice the burnt taste immediately.

 

[giofranchi]

You can get excellent coffee in New Hampshire, just not at Starbucks.  It isn't as much about the beans as it is how they are roasted.  Starbucks, like most high volume roasters, burns their beans.  The best coffee I've ever had in my life comes from a small coffee roaster in Salem, New Hampshire.  I buy my beans from them and make it at home.  I like the Sumatra or Dragon Blend, but everything I've ordered from them has been excellent, go with the vienna roast.  Order a few pounds from them mail order, they will ship it the day they roast it, you can thank me later.

 

http://coffeeroastersnh.com/

 

I've never understood what the fascination with Starbucks is.  Even Dunkin Donuts has better coffee.  I sometimes think people just like walking around and being seen with the Starbucks cups in their hands.  It's more about a brand then it is about the coffee.

 

The image in attachment is from "Onward".

Do you think it is just rubbish or simply not true?

 

Cheers,

 

Gio

 

 

The first part about their beans maybe true.  But as I said above the roasting is more important than the beans themselves.  You can start with the best beans and ruin them in the roasting process.    You can say that you roast the beans longer than others, and it may even be true (some companies are probably worse), but you can't hide the burnt taste.  Of course most people who go to starbucks for their Mocha-caramel-pumpkin-spice-raspberry-hazelnut latte with extra sugar and whipped cream aren't going to notice the quality of the coffee.  But I usually drink my coffee or espresso black with nothing added and I notice the burnt taste immediately.

 

Ok! Thank you!

 

Cheers,

 

Gio

[oddballstocks]

You can get excellent coffee in New Hampshire, just not at Starbucks.  It isn't as much about the beans as it is how they are roasted.  Starbucks, like most high volume roasters, burns their beans.  The best coffee I've ever had in my life comes from a small coffee roaster in Salem, New Hampshire.  I buy my beans from them and make it at home.  I like the Sumatra or Dragon Blend, but everything I've ordered from them has been excellent, go with the vienna roast.  Order a few pounds from them mail order, they will ship it the day they roast it, you can thank me later.

 

http://coffeeroastersnh.com/

 

I've never understood what the fascination with Starbucks is.  Even Dunkin Donuts has better coffee.  I sometimes think people just like walking around and being seen with the Starbucks cups in their hands.  It's more about a brand then it is about the coffee.

 

The image in attachment is from "Onward".

Do you think it is just rubbish or simply not true?

 

Cheers,

 

Gio

 

 

The first part about their beans maybe true.  But as I said above the roasting is more important than the beans themselves.  You can start with the best beans and ruin them in the roasting process.    You can say that you roast the beans longer than others, and it may even be true (some companies are probably worse), but you can't hide the burnt taste.  Of course most people who go to starbucks for their Mocha-caramel-pumpkin-spice-raspberry-hazelnut latte with extra sugar and whipped cream aren't going to notice the quality of the coffee.  But I usually drink my coffee or espresso black with nothing added and I notice the burnt taste immediately.

 

Yes! I like straight black coffee and this is why I've never liked Starbucks.  I'll drink it in a pinch, but the burnt taste is very strong.  People buying black coffee is rare there from what I've seen.

[rkbabang]

You can get excellent coffee in New Hampshire, just not at Starbucks.  It isn't as much about the beans as it is how they are roasted.  Starbucks, like most high volume roasters, burns their beans.  The best coffee I've ever had in my life comes from a small coffee roaster in Salem, New Hampshire.  I buy my beans from them and make it at home.  I like the Sumatra or Dragon Blend, but everything I've ordered from them has been excellent, go with the vienna roast.  Order a few pounds from them mail order, they will ship it the day they roast it, you can thank me later.

 

http://coffeeroastersnh.com/

 

I've never understood what the fascination with Starbucks is.  Even Dunkin Donuts has better coffee.  I sometimes think people just like walking around and being seen with the Starbucks cups in their hands.  It's more about a brand then it is about the coffee.

 

The image in attachment is from "Onward".

Do you think it is just rubbish or simply not true?

 

Cheers,

 

Gio

 

 

The first part about their beans maybe true.  But as I said above the roasting is more important than the beans themselves.  You can start with the best beans and ruin them in the roasting process.    You can say that you roast the beans longer than others, and it may even be true (some companies are probably worse), but you can't hide the burnt taste.  Of course most people who go to starbucks for their Mocha-caramel-pumpkin-spice-raspberry-hazelnut latte with extra sugar and whipped cream aren't going to notice the quality of the coffee.  But I usually drink my coffee or espresso black with nothing added and I notice the burnt taste immediately.

 

Yes! I like straight black coffee and this is why I've never liked Starbucks.  I'll drink it in a pinch, but the burnt taste is very strong.  People buying black coffee is rare there from what I've seen.

 

Exactly, it will do in a pinch.  It's not undrinkable, it's just not very good.  And the fact that it is expensive, means that it would be my last option.  I'll take Dunkin' Donuts, McDonalds, or even Cumberland Farms over Starbucks any day. I'm not sure if Cumberland Farms is nation wide or only in New England, it is a gas station/convenience store with $0.99 any-size coffee (hot or iced).  But most days I make my coffee at home and fill up two travel mugs before leaving the house.  That is usually enough for me for the day.

[Sunrider]

Haha I just stumbled into this thread and just reading this last page, it would appear that this discussion is about good quality coffee at Starbucks .... that's rather hilarious. Nobody in their right mind who ever had good coffee would equate Starbucks with that!  ::)

 

It's a great business ... but good coffee. Definitely not. As some posters noted. If you typically have espresso and/or take your coffee as is, without sugar and milk, you will know what sins are hidden behind lots of milk, sugar and god knows what else!

 

C.

 

 

You can get excellent coffee in New Hampshire, just not at Starbucks.  It isn't as much about the beans as it is how they are roasted.  Starbucks, like most high volume roasters, burns their beans.  The best coffee I've ever had in my life comes from a small coffee roaster in Salem, New Hampshire.  I buy my beans from them and make it at home.  I like the Sumatra or Dragon Blend, but everything I've ordered from them has been excellent, go with the vienna roast.  Order a few pounds from them mail order, they will ship it the day they roast it, you can thank me later.

 

http://coffeeroastersnh.com/

 

I've never understood what the fascination with Starbucks is.  Even Dunkin Donuts has better coffee.  I sometimes think people just like walking around and being seen with the Starbucks cups in their hands.  It's more about a brand then it is about the coffee.

 

The image in attachment is from "Onward".

Do you think it is just rubbish or simply not true?

 

Cheers,

 

Gio

 

 

The first part about their beans maybe true.  But as I said above the roasting is more important than the beans themselves.  You can start with the best beans and ruin them in the roasting process.    You can say that you roast the beans longer than others, and it may even be true (some companies are probably worse), but you can't hide the burnt taste.  Of course most people who go to starbucks for their Mocha-caramel-pumpkin-spice-raspberry-hazelnut latte with extra sugar and whipped cream aren't going to notice the quality of the coffee.  But I usually drink my coffee or espresso black with nothing added and I notice the burnt taste immediately.

 

Yes! I like straight black coffee and this is why I've never liked Starbucks.  I'll drink it in a pinch, but the burnt taste is very strong.  People buying black coffee is rare there from what I've seen.

 

Exactly, it will do in a pinch.  It's not undrinkable, it's just not very good.  And the fact that it is expensive, means that it would be my last option.  I'll take Dunkin' Donuts, McDonalds, or even Cumberland Farms over Starbucks any day. I'm not sure if Cumberland Farms is nation wide or only in New England, it is a gas station/convenience store with $0.99 any-size coffee (hot or iced).  But most days I make my coffee at home and fill up two travel mugs before leaving the house.  That is usually enough for me for the day.

[Gregmal]

The coffee is gross and overpriced but this is and always has been a lifestyle company. They have the whole cafe/hangout place thing going for them which is huge in cities. Additionally the have introduced food and deli items. The employees almost resemble a Holister/Abercrombie type place. They are typically very well put together and friendly. Far different than a DD or gas station. From a managerial standpoint the company is incredibly innovative and well managed. As for the stock, it just isn't attractive to me as the multiple is still a premium one which IMO is too much for a coffee company with a lot of positive "intangibles".

[rkbabang]

Haha I just stumbled into this thread and just reading this last page, it would appear that this discussion is about good quality coffee at Starbucks .... that's rather hilarious. Nobody in their right mind who ever had good coffee would equate Starbucks with that!  ::)

 

It's a great business ... but good coffee. Definitely not. As some posters noted. If you typically have espresso and/or take your coffee as is, without sugar and milk, you will know what sins are hidden behind lots of milk, sugar and god knows what else!

 

C.

 

I agree it has always been more about the atmosphere of the shops and being seen with the cup in your hand then about the quality of the product. And I guess there is nothing wrong with that. Whatever works right?

 

I just came across this photo and it made me laugh

[TorontoRaptorsFan]

I haven't tried their Reserve line of Coffee yet.

 

Select stores have the Clover Brewing System.

I will try it when I get my free reward cup.

https://www.starbucks.ca/coffee/learn/clover

 

A Youtube video showing it at work