Just a week ago, coffee giant Starbucks (SBUX) poleaxed the world with CEO Brian Niccol’s expressed belief that $9 Starbucks was the sign of an accessible premium experience. This did not sit well with many observers, including Caribou Coffee, which recently rolled out a new value breakfast menu that actually looks like a value. Starbucks investors took it all in stride, though, and sent shares notching up modestly in Monday afternoon’s trading.
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A recent study from Credit Karma found that 27% of Americans have recently skipped a meal to save money. That development speaks to a clear need for value pricing in food, and one that Starbucks competitor Caribou Coffee seems to be capitalizing on.
The Caribou value menu features a range of surprisingly affordable options, including a $3 blueberry muffin, a $2 small brewed coffee, and a $4 Bacon Breakfast Sandwich. That last item is new, and features bacon, scrambled egg, and melted cheese on a toasted English muffin. This means you can kick off your day in reasonably modest fashion for under $10, a development that looks like a substantial deal against Starbucks pricing.
Starbucks Counters
Starbucks is not letting Caribou Coffee get all the air time, though, as Starbucks countered by rolling out its summer menu. Last month brought with it an advance look at the menu. Now, the official menus are out, and will start serving products tomorrow, May 12.
The new menu will be long on horchata choices, with a new Horchata Frappuccino and the Iced Horchata Shaken Espresso. The Tropical Butterfly Refresher will also be in play, which starts with guava and passionfruit flavors along with mango-pineapple flavored pearls. The drink’s distinctive coloration, though, comes from “butterfly pea flower infusion.”
Is Starbucks Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SBUX stock based on 16 Buys, 12 Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 22.48% rally in its share price over the past year, the average SBUX price target of $107.96 per share implies 1.74% upside potential.
