Watching coffee giant Starbucks (SBUX) these days is a lot like watching that scene from A Bug’s Life where Hopper castigates the other grasshoppers about the ants. One ant is no problem, Hopper demonstrates, tossing a grain at a fellow grasshopper. But thousands of them can bury the grasshopper race altogether. And the grasshoppers at the top of Starbucks have three more grains to worry about, as three more shops in New Hampshire joined the strike. Investors were less concerned about those three grains and sent shares up fractionally in Friday afternoon’s trading.
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After hearing yesterday about the West Salem Starbucks in Oregon, as well as two Starbucks locations in Iowa, word that three shops in New Hampshire were also joining the fray was enough to catch some attention. Locations at Epping, Seabrook, and Stratham all joined in the fray, yet oddly enough, remained open during the strike.
The New Hampshire strikers are calling on Starbucks for pretty much what everyone else was calling for. Specifically, the strikers want better hours and improved staffing levels, a point that even Starbucks itself was looking to supply not so long ago. Though from the sheer numbers of locations calling on Starbucks to improve staffing, it looks like the efforts so far are either insufficient or have not yet materialized.
A Mounting Divide
Starbucks has frequently responded to discussion of the union with an almost dismissive attitude about offering “the best job in retail.” Some of this is with reason; after all, the unionized Starbucks are a tiny fraction of Starbucks’ overall reach. If they all shut down tomorrow for good, Starbucks would still have most of its operation running. Starbucks has about 10,000 company-owned stores in the United States. Another 7,000 locations run on a licensing arrangement. Meanwhile, just under 500 of those company-owned stores are unionized.
There are also, reports note, odd discrepancies. For instance, the union claims the average barista is scheduled for 19 hours a week, one hour less than required to access benefits like SNAP. But Starbucks points out that 85% of baristas are scheduled for preferred hours, and that it has put over $500 million into improving staffing and training levels. The disconnect makes for a difficult picture for outside viewers to fully parse.
Is Starbucks Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SBUX stock based on 12 Buys, seven Holds and two Sells assigned in the past three months, as indicated by the graphic below. After a 15.09% loss in its share price over the past year, the average SBUX price target of $95 per share implies 11.37% upside potential.
