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Just a couple of days ago I was singing the praises of Starbucks's (SBUX) technical performance. In fact, I may still be on the verge of turning a bullish corner when it comes to the stock, but then I hear reports the company is test-marketing a blueberry waffle that costs $2.50. For the record, this price is not for a plate of waffles, but for one waffle. A single, blueberry waffle (perhaps looking quite a bit like this waffle, which is labeled as caramel, for $2.50. Yes, $2.50. Call me cheap (it won't be the first time, or the last), but that seems like a lot of money for one waffle -- especially considering that a box of 10 frozen waffles is roughly $5. Consider this, McDonald's (MCD) charges a dollar for a sausage McMuffin (sausage and cheese on an English muffin). My guess is that the MCD's offering is a bit more filling than what appears to be a cookie masquerading as a waffle.
This decision is one example of why I have found it nearly impossible to be bullish toward SBUX. Yes, the stock performs well, but the company makes some questionable decisions -- especially in regards to price. The company charges far too much for its coffee and eats, and I am sure that this practice costs the company customers.
That said, there is a rabid SBUX following out there and these coffeeheads have to have their venti frappasmoothies with whipped cream. I won't lie, I have an occasional java from Schultzie's crew, but it is a special little treat -- not a daily happening. The company is lucky that there are some people with money to waste on overpriced coffee drinks, because this is the only reason the company continues to do business.
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Reader Comments (Page 2 of 2)
3-20-2010 @ 4:35PM
Barbara F said...
The business ethics professor where I teach uses Starbucks as an example of top-flight business ethics - they support fair trade to a point nearly unheard of anywhere else, going in to communities where coffee beans are grown and funding schools and other projects to help the citizens lead healthier, better lives. They treat their employees fairly - I've heard this from workers at half a dozen different Starbucks - and champion a number of ecological and social causes.
I don't have the money for Starbucks coffee often, but when I do, I go there happily - and their 'skinny' line makes it possible for me to indulge without killing my diet.
3-20-2010 @ 5:40PM
colleen said...
I don't think there is really that much to debate here. If you can afford Starbucks and you like the coffee then go. If you don't like it and can't afford it then don't. Anyone who speaks of staying home and drinking coffee, we already know we can stay home and drink coffee. Many people have long commutes and enjoy that cup on the way home.
3-20-2010 @ 7:41PM
Sharon said...
My best coffee is now from Cumberland Farms "Hyper Coffee" It's strong enough! Then I add their "English toffee" Cappuccino and get a great coffee for a mere .99 cents. It's a quick stop on the way to work. They also have this new travel cup that looks just like a single foam to-go cup that is actually more sanitary to keep clean than a travel mug. It's also environmental friendly, and again cheaper than almost all good travel mugs...1.99.
3-20-2010 @ 9:11PM
dolldsign5 said...
Hey, I go there for the ambience and the NY Times! I can't even eat their goodies any longer, because I found out I'm gluten intolerant. The decaf mocha with 1/2-strength chocolate is about my speed. If I really want to chow down, I go elsewhere.
3-20-2010 @ 10:55PM
tenscdon1 said...
What type of analyst questions a company that stock has grown from $7.00 to $25.00 in one Year! then says, I might become bullish. You lost me there. But then when you compared any of the pastrys to McD's or a grocery store? Seriously? Do you know what a Sbux customer is looking for in thier purchase? Comfort, Quality, Convienience, and consistency. Try getting one of those from McD's or even DD. EVer wonder why DD promotes their coffee so hard? Because the donuts cost the Franchisees .80 cents each. That is why they are stale when you get them. there were y-days donuts. Wake up.