You have to give coffee giant Starbucks (SBUX) credit for effort. It has made some great strides so far since it started its turnaround plan, and just recently, it celebrated an absolutely killer week in sales. But there have long been some cracks in the armor surrounding Starbucks’ Green Apron Service plan, particularly where it makes contact with reality. One barista recently explained the issue, and a problem clearly emerged. Shareholders were less than pleased, and shares slipped fractionally in Wednesday afternoon’s trading.
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This summer, the absolute winner of Starbucks beverages was the Strawberry Matcha Strato Frappuccino. One barista, Brooke Allen, explained why this drink was also a nightmare for baristas. Making it was something like a minor chemistry project, requiring not only six separate ingredients but also two entire blenders to make correctly. The drink by itself took about 40 to 50 seconds to make…but that was before the corporate-required add-on points kicked in.
Baristas are now not only required to make that drink, but they are also required to greet the customer, make eye contact on handing over the drink, and “…write a genuine message on each cup.” All of this must be done in under four minutes. Allen elaborated, “…it’s frustrating to see orders for that come on during peak times. That one is so complicated.” It got worse; customers and baristas alike grew frustrated with frequently-shifting menus. The Petite Vanilla Bean Scone disappeared, and reappeared suddenly. The Java Chip Frappuccino was officially pulled, but anyone who requested it got one.
The Butcher’s Bill Arrives
Meanwhile, Starbucks’ turnaround efforts are not without casualties. A list recently landed, detailing stores that are set to be closed. The list is 90 locations strong so far, and may rise from there. The stores in question, reports note, are “mobile pickup-only” stores, which originally took some of the weight off sit-down stores. They now have little place in a Starbucks that now very deeply wants people to sit down.
While locations in around 23 states were impacted, some were much more impacted than others. Some states saw a single location close. Several others saw fewer than five. But states like California, New York and Texas saw larger numbers. California lost 20 stores by itself, or close to a quarter of all stores being closed. And of those 20 stores, six were in Los Angeles.
Is Starbucks Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SBUX stock based on 14 Buys, eight Holds and two Sells assigned in the past three months, as indicated by the graphic below. After a 14.65% loss in its share price over the past year, the average SBUX price target of $100.68 per share implies 21.33% upside potential.
