We know that coffee giant Starbucks (SBUX) has been actively pursuing change at its locations, eager to get customers to come back in, sit for a while, and order more food and drinks while they happen to be sitting there. But a new wrinkle is hitting surprisingly hard, noted some reports. Some Starbucks locations are apparently running out of food. That did not sit well with stockholders, as shares slipped fractionally in Thursday afternoon’s trading.
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Starbucks has worked diligently to remodel its cafes and make them more appealing to sit and enjoy a little quiet time at one of those “third spaces” we hear about that are neither work nor home. But the logistics of making such comfortable and welcoming spaces have not always kept up. Starbucks is, reportedly, running out of food in at least some locations. Though apparently this is dependent at least somewhat on location—indeed, unexpected supply shortfalls are simply part of life any more—the more often it happens, the more often Starbucks’ return to sit-a-spell form will be hampered.
Stores in Connecticut, Michigan, New Jersey and New York are apparently also running into an issue of seating. For a corporate philosophy that now so strongly encourages coming in and sitting, there is a surprising dearth of chairs at these locations. And of course, the recent return-to-office mandates will likely not do morale any favors, especially with CEO Brian Niccol’s plan now set to put cash into getting rid of employees who cannot or will not play along.
The Secret Menu Catching On
There is good news and bad news about the reaction to the recent democratization of the secret menu at Starbucks. Many of these drinks have been added to everyday rotation, given special privilege with their own order tabs. While this has opened up some new opportunity for Starbucks to make sales, it has also removed a bit of that “in-the-know” cachet from the process. Whether this is a net win or a net loss remains to be seen.
Starbucks has actually tried this before. The “Medicine Ball” drink turned into “Honey Citrus Mint Tea,” and went mainstream a while back. In fact, reports note some even still refer to it by its secret menu name, which is proving annoying to some baristas. Though the whole thing is moot now, as its base, Peach Tranquility tea, is discontinued. The Pink Drink and Cotton Candy Frappucino also got elevated from secret to mainstream, proving Starbucks is always willing to tap a secret for more sales.
Is Starbucks Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SBUX stock based on 13 Buys, 11 Holds and two Sells assigned in the past three months, as indicated by the graphic below. After a 24.69% rally in its share price over the past year, the average SBUX price target of $95.55 per share implies 3.45% upside potential.
