In an interesting development, coffee store giant Starbucks (SBUX) has opened a unique location in South Korea that offers customers a rare view of North Korea. The new observatory restaurant in Gimpo, 31 miles northwest of Seoul and less than a mile from the Demilitarized Zone (DMZ), provides a close look at one of the world’s most secretive states. This area has remained a symbol of tension since the Korean War, which ended in 1953 with an armistice rather than a peace treaty, which means that the two Koreas are technically still at war.
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The restaurant is part of the Aegibong Peace Ecopark that overlooks a neutral river separating South Korea from North Korea’s Kaepung. On clear days, customers can use telescopes to see life on the other side of the border. Unsurprisingly, visitors must pass through a military checkpoint in order to access the observatory, which is a reminder of the ever-present security concerns in a region marked by decades of political tension and military stand-offs.
Nevertheless, this Starbucks location will draw tourists who are fascinated by the ongoing conflict as well as the stark contrast between democratic South Korea and authoritarian North Korea. The DMZ has become both a heavily guarded buffer zone and a tourist attraction that offers glimpses into an isolated nation with extremely limited knowledge of the outside world.
Starbucks Pushing for a Turnaround
Similar to the way the DMZ zone separates the two Koreas, Starbucks is hoping that its turnaround plan will separate its future performance from the disappointments it has seen in the past couple of years. And although interesting locations like the one mentioned above could provide a small boost to its efforts, the company will need to also increase business at its less interesting stores in order to make any meaningful improvements. To that end, Starbucks had its best U.S. sales day ever on Red Cup Day earlier this month, according to an internal message obtained by The Wall Street Journal.
Indeed, CEO Brian Niccol called it “a fantastic day for coffee and a great step in our journey.” Visits to Starbucks surged 42% on the day of the promotion compared to typical Thursdays, based on Placer.ai data. The company also saw more foot traffic during Red Cup Week than it did during the launch of its popular Pumpkin Spice Latte, Placer.ai reported.
This solid result implies that the company’s turnaround efforts are potentially off to a good start and will hopefully lead to new highs in its share price.
Is Starbucks a Buy or Sell?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SBUX stock based on 15 Buys, six Holds, and four Sells assigned in the past three months, as indicated by the graphic below. After a 5% rally in its share price over the past year, the average SBUX price target of $102.32 per share implies 0.41% upside potential.
