Starbucks Corp (SBUX)

acare (< 20) Submitted: 6/14/08 1:51 AM

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I dont drink coffee, I drink Pepsi. But I dont agree with your argument.
People wont stop drinking Coffee just because the economy has a few small problems, coffee and sodas are comfort food and history has always shown that people will still go for comfort food during bad times. We are not talking about items that are super expensive, we are talking about small priced items. Think about it even in the great depression, one thing that even the poorest person still wanted was a cup of coffee. I dont see people stoping drinking coffee that easily. The volume may slow down but I dont see it slowing down that much.

As for McDonalds. Give me a break. McDonalds couldn't brew anything more than a basic cup of coffee, this dream of theirs to make specialty coffee is just that a dream.
Think about it for a minute. If you ask them for a basic hamburger they can do that just fine, but ask them to make one small change and they fail 80% of the time. I dont like pickles, and 80% of the time they still put a pickel on the burger. Also I perfer my quarter pounders without cheese, and I will tell them no cheese at least 3 times and more than 50% of the time they still put cheese on the burger.

McDonalds biggest problem is language, and assembly line training. Most the McDonalds that I have been in are staffed by either asian or hispanic employees who can barely speak english, and McDonalds training is geared to pushing out assembly line hambugers, with all the fixings. As I indicated earlier if you ask for anything not standard on the assembly line they usually can't do it correctly.

I see McDonalds push into the coffee business as an attempt to try to expand their business before they even take care of their current business needs. McDonalds needs to fix their own products and communications with customers before they try to move into other areas.

I cant see people who dont know english trying to make specialty drinks for coffee drinkers. There is a big difference in brewing a basic cup of coffee and making a moca or lattes.

Even though I dont drink coffee I do go to Starbucks a couple of times a week with coworkers and friends who do drink coffee and spend time there talking aoubt things, they have a very nice area to just hang out for a while. I have never felt that way at McDonalds, and the smell at McDonalds of bugers and fries doesnt seem to provide the same atmosphere.

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kruegsw (62.35) Submitted: 6/18/08 2:09 PM

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When's the last time you had a coffee from McDonalds? It's burnt, it tastes bad, and it's served from somebody who didn't graduate high school.

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TheParadox (93.27) Submitted: 6/23/08 12:30 PM

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People wont stop drinking coffee, they'll stop paying a ridiculous amount for it... SBUX is facing more and more competition and the market price (spot price i believe its called) of coffee is about 30% up this year or over the past year... whatever, its up like 30-40%.

Prices are rising, competition is increasing, consumer are feeling less wealthy... inflation (both on the dollar and plain food), higher gas prices... people will save their money and seek the competitors. no brainer.

SBUX really is faced with either cutting margin's by selling the product cheaper: hard to do when commodity prices are rising... or cutting some product quality, which goes against the brand name and can produce long term problems... The alternative is people are happy with $5 dollar coffee like their happy with $4

The comment on MCD's coffee Kruegsw sounds like a personal problem you have with MCD, not all MCD's have the same customer services; Not all drop outs work at MCDs

While the 2 comments don't agree with a very weak bear pitch. The chart says different, look at a one year and see MCD up 20% and SBUX down 30%.

Also, SBUX is opening up only 400 stores this year, a major cut back despite the CEO talking hitting the 40k store mark.

SBUX is not a good play...

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mattwarden (40.82) Submitted: 7/04/08 3:52 PM

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McD's isn't a replacement for Starbucks. Starbucks has the franchise and even "competitors" like Caribou and others don't come close to capturing the irreplaceable mindshare Starbucks has. It will take a dive here for a while because (a) transport costs will hurt them, and (b) the recession will hurt all luxury items like high priced coffee. Long term, though, this is a good play.

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