There were plenty of people who wondered if Brian Niccol’s plan to make coffee giant Starbucks (SBUX) a “third place” again was misguided. And after seeing the projections around Starbucks’ earnings, as well as some of the early data on customer habits, those voices are getting a little amplification. In fact, Starbucks stock was down nearly 1.5% in Wednesday afternoon’s trading.
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A representative for Starbucks put the best spin possible on the notion, saying, “Early results from uplifted coffeehouses in New York City and Southern California are already showing promise. Customers are staying longer, visiting more often, and sharing positive feedback.” However, data from Placer.ai notes that the share of customers staying longer than 10 minutes in general has been in nearly-constant decline since about November 2024. There was some recovery seen, but in general, the share of customers sitting and savoring has not exceeded the numbers seen back in November 2024.
Jon Tower, Citi analyst—who has nearly a five-star rating on TipRanks—noted, “They’ve trained their customer to use this brand as a convenience channel, not as a place where you sit down and linger.” Tower also noted, “They just want more people to come in and walk in and say, ‘wow, this feels like a great place.’” So while there are signs the plan is working, in at least some places, the majority of locations have not seen any such movement.
The Uplift Continues
Starbucks actually has a name for its modified store format, called an “espresso bar” format. This will actually be the store style of choice for future expansion plans, which was already being tested in the Flatiron neighborhood in New York City.
It is described as one of the “uplifted” stores, which is a “small-scale renovation” in Starbucks terms, reports note. Visitors who went in found it “cozier than the average New York City Starbucks,” and noted that earlier designs could feel “…industrial and cave-like.” So Starbucks is certainly succeeding on that front. The question remains, however, if Starbucks can keep this flow going and keep users interested in an idea they really were not before now.
Is Starbucks Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SBUX stock based on 13 Buys, seven Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 12.22% loss in its share price over the past year, the average SBUX price target of $99.16 per share implies 17.68% upside potential.
