Coffee giant Starbucks (SBUX) is planning to remove canola oil from items in its U.S. menu to enhance its healthy appeal, according to Bloomberg. For instance, the company is aiming to make its popular dishes, such as egg white and roasted red pepper bites, without canola oil. Starbucks is also considering adding a new item, egg bites made with avocado oil, to its menu.
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These steps come amid the coffee house’s troubles with declining sales as customers become more health-conscious. CEO Brian Niccol has pledged to revamp the brand by testing and rolling out healthier products. Starbucks has not given a specific timeline for implementing these changes.
Starbucks Steps Up Rebranding Initiatives
In June, Niccol met with U.S. Health and Human Services Secretary (HHS) Robert F. Kennedy Jr. to discuss the potential for aligning Starbucks’ menu with the Trump administration’s health priorities. The HHS has specifically opposed the increasing use of seed oils in foods, including canola and soybean oil. However, there is no proven theory that prolonged consumption of these oils leads to inflammation or increases the risk of cardiovascular disease.
Notably, many items on Starbucks’ U.S. menu contain canola oil, such as bacon, potato bakes, and the Gouda and egg sandwich. The company has also made other health-related menu changes at its outlets, such as removing sugar from its matcha powder, a move that has, in fact, boosted sales. Similarly, the chain stopped charging extra for non-dairy milk and is testing unsweetened protein powder that can be added to any cold foam flavor.
Starbucks earns roughly 74% of its revenue from the U.S. market, making it the company’s largest contributor. Additionally, 19% of its revenue comes from Food sales. Therefore, it is important for the coffee chain to keep modifying and aligning its menu with American consumers’ shifting food preferences.
Is SBUX a Good Stock to Buy?
Analysts remain divided on Starbucks’ long-term stock trajectory. On TipRanks, SBUX stock has a Moderate Buy consensus rating based on 13 Buys and 11 Hold ratings. Also, the average Starbucks price target of $95.52 implies 2% upside potential from current levels. Year-to-date, SBUX stock has gained 3.9%.
