A while back, around Labor Day, we came out with a look at coffee giant Starbucks (SBUX) and how shutting down the mobile-only operations might be a bad move. It turns out that we were not the only ones thinking this, as new reports are out suggesting that shutting down the order-only operations could be a “risky move” on Starbucks’ part. Investors seemed willing to take the risk, however, based on the gain of over 2% seen in Wednesday afternoon’s trading.
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The calculus here is simple: the order-only shops served a purpose. For those customers who wanted to grab a drink and go, Starbucks was ready, cup practically in hand by the time you hit the drive-through window. But that does not mesh with the Back to Starbucks plan, which wants to see people treat Starbucks like a late-nineties coffeehouse again. People sitting, relaxing, meeting each other…these things do not work well with “grab your coffee and go.”
The report in turn suggests that Starbucks is leaving money on the table by shutting down what it calls the “grab-and-go” market segment of Starbucks consumers in favor of the “stay-and-savor” crowd. While stay-and-savor is definitely a thing, Starbucks ignoring that entire market of grab-and-go leaves a significant opportunity open for competitors to go after a fairly large market that Starbucks apparently no longer wants. And those competitors are already growing in number.
No Outside Food
Meanwhile, Starbucks locations in South Korea are running into an unexpected problem: outside food. Apparently, Starbucks patrons in South Korea are having a problem with customers coming in and bringing their own food with them. Baby food, however, is still permitted, so if you are willing to have mashed yams with your latte, go nuts.
Considering that, back in August, South Korean Starbucks locations were also banning people from bringing in office equipment much beyond laptops and other portable gear, banning outside food does not exactly seem out of line. One wonders what the Starbucks experience must have been like in a place where people were bringing in printers and fried chicken.
Is Starbucks Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SBUX stock based on 13 Buys, six Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 14.99% loss in its share price over the past year, the average SBUX price target of $101.44 per share implies 22.57% upside potential.
