Starbucks Partners with Meituan to Enhance Coffee Delivery in China

Starbucks (SBUX) has inked a strategic partnership with Meituan to expand its coffee chain delivery footprint in China. Customers will order coffee delivery via the company’s apps platform. Over the years, Starbucks has relied on Alibaba’s (BABA) Ele.me for coffee delivery in China. It will continue its partnership with Alibaba as it develops specialty events and deliveries with Meituan.

Starbucks is a U.S.-based company that roasts and retails specialty coffee. It runs over 30,000 stores in 80 markets. The Starbucks earnings report for Fiscal Q1 2022 is scheduled for January 27, 2022. Starbucks dividends have increased steadily over the years, leading to a dividend yield of 1.88%. SBUX shares fell 2.23% to close at $100.12 on January 14.

Partnership with Meituan

The strategic partnership serves Starbucks’ goal to become a “third place,” or a place where people spend time, in addition to home and office. To that end, it will allow Meituan users to book private events at Starbucks’ stores. Starbucks has also confirmed it will utilize Meituan’s superstore feature, giving each of its stores a unique page on Meituan’s platforms. From there, customers will be able to book food delivery services directly, to their homes or to other locations.

Expansion in China does not come as a surprise, as it is Starbucks’ second-biggest market after the U.S. The company operates 5,360 stores in more than 200 cities in the country.

Stock Rating

Early in the year, Oppenheimer analyst Brian Bittner downgraded Starbucks to a Hold from a Buy. The downgrade comes on growing concerns that the company’s EPS forecasts for 2022 and 2023 lack the upside levers needed to ensure outperformance.

Consensus among analysts is a Moderate Buy based on 11 Buys, 10 Holds, and 1 Sell. The average Starbucks price target of $124.16 implies 24.01% upside potential to current levels.

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