So while most of us are still trying to make sense out of coffee giant Starbucks (SBUX) and its pivot to Nashville, it made another pivot that might make even less sense. Or it may make more sense, depending on how you choose to look at it. Starbucks is opening a corporate office in India, and investors seem pretty happy about this. Starbucks shares were up fractionally in Monday afternoon’s trading.
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The move will be Starbucks’ first corporate step into India not part of a joint venture, and will serve as a cost-cutting measure. Starbucks plans to open the Indian office in fiscal year 2027, and will bring some roles that had been outsourced into the fold. The move will allow Starbucks to “…reduce…reliance on external service providers,” a move that will require Starbucks to “…establish…a multi-site structure….”
Starbucks noted that third-party technology providers charge a markup, and with Starbucks opening its own office, it can effectively pull that markup out of the system. This is all part of a larger move to save money that seems focused on staffing. The move to Nashville, the layoffs, and now this all seem to incorporate into a bigger move to reduce the amount of cash Starbucks lays out on staff.
The Cost of Firings
Meanwhile, new reports also laid out just how much Starbucks is shelling out for some of these moves. It turns out that the tech jobs, other cuts, and shuttered regional offices will ultimately trigger $400 million in restructuring charges for Starbucks.
Job cuts do not save money immediately. There are impairments connected to real estate, as are some connected to severance benefits. In fact, the latest cuts means $280 million in real estate costs, and $120 million in severance benefits. But all of this is said to be part of the larger movement to get customers into the stores that remain, and produce revenue growth, which Starbucks will absolutely need to cover all these new costs.
Is Starbucks Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SBUX stock based on 17 Buys, 11 Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 26.24% rally in its share price over the past year, the average SBUX price target of $110.88 per share implies 3.62% upside potential.
