It would be easy to be concerned for coffee giant Starbucks (SBUX) right now. With economic uncertainty dominating the landscape, the idea that customers would cut back on coffee drink purchases in favor of, say, home-brew is a reasonable notion. But CEO Brian Niccol is not concerned, thanks to a simple matter of value. Shareholders were not so sure. Starbucks shares slipped fractionally in Wednesday afternoon’s trading.
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Niccol pointed out a key point on the recent third-quarter earnings call that may have left some naysayers silent. He noted, “Customer value perceptions are near two-year highs, driven by gains among Gen Z and millennials, who make up over half our customer base.” This is a point Niccol hopes to reinforce with two seemingly contradictory goals: reducing wait times to under four minutes and adding more personal touches like messages on cups.
There are signs the plan is working. There are also signs it is not. But most are still watching and waiting to see which set of early signs takes root. Niccol is certainly backing his own play, as he noted “When you look at putting those two things (exceptional service and a quality menu) together for the price that we will have to charge for it, I think it will turn out to be invaluable.”
About That Service Thing….
But the issue of customer service is coming back to bite Starbucks already, as the “personal message” point is starting to drag on Starbucks. A TikTok video that reportedly went viral featured a Starbucks barista who refused to write one message in particular: Charlie Kirk’s name.
Several Kirk fans have been going to Starbucks to order Kirk’s own favorite drink: a mint majesty tea with two honeys. When one of them wanted the man’s name written on the drink, the barista refused, noting the customer had to “…pick a different name…” as that Starbucks did not “…honor politics here.” Naturally, Starbucks responded that there was no policy preventing the barista from writing the name Charlie Kirk on the side of a cup, and Starbucks is also “…working to understand what took place in this store.”
Is Starbucks Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SBUX stock based on 14 Buys, six Holds and two Sells 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 $102.10 per share implies 21.42% upside potential.
