Most people expect that a trip to coffee giant Starbucks (SBUX) will not involve maggots. This is reasonable enough, given that Starbucks barely handles food, let alone raw meat. But a former Starbucks vice president recently detailed her firing as part of a wrongful termination and sex discrimination lawsuit. The firing involved a disturbingly high number of maggots. This did not sit well with investors at all, who sent shares down fractionally in Tuesday afternoon’s trading.
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The lawsuit, filed by Janice Waszak, noted that Waszak refused to report false information about Starbucks’ “Siren System,” which included risks to profitability, health and safety. Starbucks’ Siren System came online back in 2022, and apparently was able to make any drink on Starbucks’ menu in 40 seconds or less, a huge step up from the current four-minute goal.
But the Siren System—the brainchild of then-Senior Vice President of Partner and Customer Solutions Natarajan Venkatakrishnan—apparently had some flaws. Financial projections were optimistic to the point that some Starbucks executives accused Venkatakrishnan of falsifying numbers. A live demonstration later featured maggots coming out of the device’s milk dispenser, which a barista apparently “flicked away” to keep them out of sight. A separate test featured the device catching fire. Waszak later reported the matter, and was fired in response, despite an internal investigation finding no grounds for her dismissal.
It Gets Worse
Meanwhile, Starbucks is also facing challenges in its supply chain, as apparently, staple goods are running out with replacements slow in coming. Keeping locations in things like milk, pastries, and cup lids are all major issues Starbucks has encountered. New CEO Brian Niccol has made these points a key part of his turnaround plan, reports note.
Reopening the condiment bar is one example of this. While it speeds up order delivery by not requiring baristas to add the components themselves behind the bar, it also presents a new potential point of failure as the condiment bar running out is publicly and highly visible.
Is Starbucks Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SBUX stock based on 13 Buys, eight Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 4.06% loss in its share price over the past year, the average SBUX price target of $98.05 per share implies 2.59% downside risk.
