Those who have recently ordered coffee at coffee giant Starbucks (SBUX), ask yourself: what did the note on the cup say? Do you remember? Can you remember even a couple hours later without fishing the cup from the trash, or without checking it if it is still on your desk or in your cup holder? Cup notes are a big part of Starbucks these days, but should they be? The question is catching growing attention, but investors seem unconcerned either way. Starbucks shares gained modestly in Wednesday afternoon’s trading.
Claim 55% Off TipRanks
- Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions
- Discover top-performing stock ideas and upgrade to a portfolio of market leaders with Smart Investor Picks
“…they read like a cry for help,” noted one report, as the issue of cup notes draws a surprising amount of concern. Brian Niccol and Starbucks brass want them in place, believing they are a way to connect to the customer and provide that “third place” warmth and energy that will keep customers sitting around and ordering food and drink all afternoon. But Starbucks’ still-small union is fighting them, and customers seem to neither little note nor long remember the pithy little sayings.
All this may sound innocent enough, but there are issues. The cup writing adds time to each order, time that Starbucks is desperate to trim down. There is a laundry list of rules surrounding cup writing, with infractions carefully policed. And sometimes, cup writing leads to a serious public relations issue for Starbucks. Yet Starbucks persists, believing that canned, pseudo-inspirational messages somehow create emotional connections among strangers.
More Reasons to Bug Out
Trying to pin down a single reason why Starbucks favored Nashville over Seattle for its expansion plans has proven difficult for outside observers already. Simply suggesting multiple reasons were likely involved seems much more reasonable, and a look at the landscape does not hurt matters either.
New Seattle mayor Katie Wilson’s near-immediate call to boycott Starbucks after getting voted in was likely not helpful in keeping Starbucks in the state. A new report also points to tax issues; Tennessee has what one report called “…the nation’s eighth-best tax climate for businesses…” while Washington state ranked 45th. Throw in the lack of a personal income tax and that might fire up a new appeal to Starbucks brass looking to not write checks to a state several times a year.
Is Starbucks Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SBUX stock based on 16 Buys, 12 Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 26.88% rally in its share price over the past year, the average SBUX price target of $107.96 per share implies 1.35% upside potential.
