Remember how, almost out of nowhere, coffee giant Starbucks (SBUX) started closing stores at a rapid clip, leaving building owners and city officials wondering what hit them? A new report out from the Wall Street Journal suggests that the project was not only planned ahead, but it even had a name within the company: Project Bloom. Shareholders seemed blindsided, and profoundly unhappy, as suggested by the nearly 4.5% loss in Starbucks shares in Monday afternoon’s trading.
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The entire existence of Project Bloom was kept tightly under wraps for some time, the report noted, as Starbucks corporate staff evaluated thousands of coffee shop locations throughout North America. Ultimately, Project Bloom came to a conclusion with a whirlwind of closures and the layoffs of what was described as “thousands of employees.”
This undoubtedly came as a shock, even if only on a philosophical level. Starbucks had been known for rapacious expansion; even in the 1990s, an episode of The Simpsons featured a shopping mall where every store had been replaced with a Starbucks. The speed at which the closures took place also left a lot of people—from baristas no longer employed to landlords wondering where their rent-paying tenant went—on the back foot. But word from Brian Niccol may have buoyed the survivors’ spirits, as he noted he “…hoped the broad staffing cuts and store closures were over.”
The “Beautiful Opportunity”
That was when something unexpected happened, that probably should have been a lot more expected than it was. Out in Pittsburgh—where it turns out there are a lot more coffee places than you might think—cafe owners are taking the opportunity to point out that coffee in Pittsburgh is more than just Starbucks.
Pittsburgh lost three Starbucks locations as a result of Project Bloom, and Pittsburgh coffee drinkers scarcely noticed. Instead, they continued to patronize independent coffee shops throughout the area. A WalletHub report noted that Pittsburgh actually represents the number one source for coffee shops per capita in the United States, and was 10th overall in the 100 largest cities in the country.
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 two Sells assigned in the past three months, as indicated by the graphic below. After a 10.06% loss in its share price over the past year, the average SBUX price target of $101.84 per share implies 23.13% upside potential.
