Mr. McIntyre,

You hit the nail on the head. SBUX public relations has to do two things.

First, stop acting as if they were the advertising department and start doing real PR, like listening to the word on the street.

Second, address the issues that are being blogged about to death with simple, clear and coherent statements like "contrary to what may be common perception, the actual results show..."

It is not enough to file a 10Q and assume that everyone on blogosphere will read it. In reality, only a few analysts and investors read or even know how to read a 10Q.

In this day and age, PR departments should be spending at least half their time on blogosphere and reply to articles like yours.

See this article:
http://www.crossprofit.com/article.asp?id=145
for the CrossProfit consensus. It wasn't so long ago that we agreed with you (or is that the other way around?) that SBUX was overpriced. In any case, this is clearly not the case today.

CrossProfit

Just add something good and free. Keep the same cost for a cup of coffee and the freebe

I think you should use the old"Kiss" method

Another fine article by Mr. McIntyre.

Other factors that are hurting SBUX, which I also previously commented upon in the most recent article prior to this one pertaining to SBUX, is also that Starbucks is much more specialized as opposed to say a Wal-Mart which is more a generalist business selling both have-to's and want-to's.

Starbucks sells a business-to-consumer "want to" as opposed to a "have to". Coffee is definitely more than a want-to than a have to (I have my disagreements with the CrossProfit folks especially with the tobacco industry and nicotine addict comparisons). Specialty coffee is DEFINITELY a want-to as opposed to a have to.

What Starbucks did is it gave the market place a product it didn't know it wanted. I mean seriously, who in the early 1980's knew about latte's, cappuccinos, and other specialty espresso based coffee drinks?

Howard Schultz took the concept of the coffee bean / espresso bar culture from Italy and popularized it in the U.S. And this caused mom and pop cafe's / coffee bars to fear for their lives once Starbucks deposited itself in their humble little hamlet. Now Starbucks in many neighborhoods has become the best friend of these very independent coffee shops. Starbucks did the work of popularizing specialty coffee / espresso coffee drinks (and even more so plain old coffee) for these shops. Thus these small stores are piggy-backing off of Starbuck's success and now if someone wants a fix they can also go to these independent coffee shops as well in lieu of Starbucks if they so choose.

Another puzzle for SBUX is it is very much a one size fits all type of business in terms of experience, as is the case with most businesses. For example, in Washington D.C. there is a coffee bar called Tryst that is very very popular. Across the street is a Starbucks. Guess which place gets my business when I'm in downtown Washington? You guessed it - Tryst - why? The atmosphere.

The common denominator really is emotion. Let me explain. Both Starbucks and Tryst make good coffee drinks, however Tryst has the ambience. Starbucks can not compete with independent coffee shops as Starbucks only tries to create one type of atmosphere. Each independent coffee shop has it's own type of atmosphere.

As I may have repeated in my previous commentary, the general public will simply NOT become connoisseurs of coffee. Connoisseurship is rare and in fact most people will not care so long as they get fix. Again emotion is a common denominator.

Case in point if someone had told me 15 years ago, maybe even 10 years ago that the dominant music delivery format would have had a sound quality at best 1/10th of a compact disc, I would have laughed and inexorably smacked them.

Lo and behold, we have mp3's circulating at 1/20th the sound quality of a CD! The masses don't care because it's enough data to represent the music enough so that they get their fix!

Starbucks is the pioneer that is making coffee / espresso drinks more and more popular, and henceforth driving up profits not only for Starbucks itself, but also independent mom and pop coffee shops, AND their competitors (McDonalds and Dunkin' Donuts) who are piggy backing off of SBUX's success!

So guess what, should we really be in a recession soon, more and more people will purchase less expensive coffee that taste's just as good - if not better - as Starbucks coffee. (I do not think nearly as many people will quit coffee wily nilly, although some might, however I presume that the coffee drinking masses will simply seek out less expensive substitutes for their caffeine fix, and some if not many will reduce their caffeine from coffee intake). This might also be a good time for Caribou Coffee to do what they can to strategically win over more market share.

If I were McDonald's or Dunkin' Donuts, I would invest in small independent coffee shops or chains around the country (i.e. similar to a Javatini's out in California, Tryst in Washington, D.C. etc, etc), or build a coffee company to take national, or START OFFERING SPECIALTY COFFEE DRINKS in house and offer them at prices substantially LOWER than Starbucks.

So Starbucks stock will remain low, not only because of their secretiveness towards the Street, but also because a bad economy and higher prices will force their consumers to get their fix elsewhere. Market share will be won over to their competitors who are realizing the coffee game is a good one to play right now, and can deliver good tasting coffee, for less.

However, the stock just might be a good one to buy now depending on how management responds to what's going on. We'll have to wait a few months to see the fruit of their labor, assuming they DO choose to act in response to what's happening.

The chain has lost it's luster, warm and cozy feel to them, like they once were in the area. They compete among themselves for business and that is not a good thing for an investor or customer, There was only one by my home in a 1 mile radius now there are 3. We don't go to Starbuck anymore it has gotten to expensive, We did usaully spend about $72 a week there, now there are other coffee houses in the area that are much cheaper and the coffee is better.