SBUX

[rffrydr]

So there is the $3 cup of coffee the old timers laugh at. My neighbor goes out of his way for the Arco Fillup--and my SBUX toting friends have been pushed to that on occasion think the coffee there is satisfactory.

But of course it's a lifestyle question, built on the core of their business, selling drugs. As drugs go this is cheap. Esp relative to cigarettes. If you doubt just check out what SBUX success has done the the Jamba Juice menu (all new Brazilian guanara (sic) caffeine nut) or the proliferation of SBUX drive-thrus. When you got to idle your car in line that can only mean one thing: you're hooked.

Speaking of which, they've made their move on the liquor aisle of your neighborhood RiteAid--going after the creme-liquour market where they're actually the low-cost leader! (next to Prince Charles' private reserve).

Remember when they were going to be a Web Portal??? Big price drop. But now they're getting into the new Movie distribution pipeline with the Bee. Wow.

Which begs the question of whether SBUX can accomodate the non-drinkers such as myself, asian asians and the children for another leg up. The Strawberry/Creme has gone along way for the kids. And the green tea blackberry frap's a hit in Asian San Gabriel Valley. Was just in first SBUX here with Chinese signage. The teas all come first. Apparently, offshore, there's some problem with the "10,000" permutations of orders. No-one likes to feel stuped. Esp. when a "tall" is a small. They also have "kid" sizes. I've seen mothers shopping in Target with all the kids with SBUX cups. I wonder if frapps or chai are considered acceptable drinks for kids these days.

As for myself: I've been sucked in via my friends. I've found accomodations with the Venti Vanilla Creme 3.75 with premium top of whipped creme, and ample additions of half-n-half and nutmeg. SBUX probably doesn't count on these quanties of "extras" but makes for one of the best milk shake values around.


And there employee committment makes for high level of quality control (against Coffee Bean).

Hard to step in front of this. As likely as not they'll be last down. But do you see em trying to sell off today? Sooooo cute!

[rffrydr]

The new egg-mcmuffin vs. the new coffee:

http://ftalphaville.ft.com/blog/2008/01/08/9993/starbucks-not-lovin-it-for-desking/

--A third space it's not.
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[rffrydr]

The new old go-to guy:

http://biz.yahoo.com/ap/080107/starbucks_ceo.html
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Italy, the last standout:

http://www.ft.com/cms/s/0/fb8c6da0-b41d-11dc-a6df-0000779fd2ac.html

http://www.ft.com/cms/s/0/56ef6652-b3dd-11dc-a6df-0000779fd2ac.html
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[rffrydr]

Good overview and tries to set up the bull case based on addictive behaviors during recessions:

http://seekingalpha.com/article/57304-starbucks-accept-the-addiction
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

The divide between SBUX and McDonalds grows more narrow. On top of strong earnings (dollar aided) Micky's goes upscale:

http://www.foxnews.com/story/0,2933,153634,00.html

100,000 per store in refits seems like alot of outlay for a couple of Braun machines.
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[rffrydr]

The "Ghetto Latte":

http://www.slate.com/id/2172288/
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Today is the Tomorrow you worried about Yesterday!

[HenryTo]

Well guys, here is the news you've all been waiting for. My guess is that there will be a trial run first to see how the reception would be, given the initial outlays, renovation costs, etc. Even if this takes off, however, SBUX will still survive and thrive, but its stock probably will most likely fizzle - at least as a growth stock. Still in the very preliminary stages, however, so don't be surprised if I go long SBUX at some point over the next 6 to 12 months, especially if the stock trades down on the following "news":
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McDonald's Eyes Ballooning Coffee Market
Sunday November 18, 3:22 pm ET
By Ashley M. Heher, AP Business Writer
Clash of the Titans? McDonald's Eyes Ballooning Coffee Market, but Franchisees Not Happy

CHICAGO (AP) -- McDonald's Corp. executives came out swinging when they announced their assault on the comfy world of coffee shops.
After the success of its upgraded drip coffee -- which even managed to snag a thumbs-up from testers at Consumer Reports earlier this year -- the fast food chain known for super-size meals is gearing up for a massive expansion into the world of lattes.

"We want to move from beverages as an accompaniment to being a beverage destination," Don Thompson, president of McDonald's USA, said in a meeting with analysts Tuesday. "Our speed, our convenience, the value that we can afford to customers without quality comprise will make us a formidable player."

Restaurants will offer lattes, mochas, cappuccinos and espressos with a choice of different flavorings and milk. Industry watchers say the drinks cost about 50 cents less than at Starbucks.

But as it tries to cash in on the fast-growing specialty coffee market, the world's largest restaurant chain is already finding itself at odds with the unlikeliest of groups: Its own franchise owners.

"There's a real groundswell of resistance among the franchisees about this," said Richard Adams, a consultant for McDonald's franchise owners. He estimated the effort has a 50-50 chance of getting off the ground because of franchise opposition.

Store owners are balking at the plan's estimated $100,000 price tag to cover renovations and initial new equipment.

And many are concerned that little customer interest in McMochas means it will could take years to recoup their investment, even on the famously high-margin coffee drinks.

"They're going to have whipped cream on their face," Adams said.

McDonald's said it's confident the new coffee will win over new customers and help individual stores boost annual revenue by about $125,000 once the coffee products, along with new bottled drinks, smoothies and other beverages are added to stores.

Zachary Aisley, a 27-year-old from Woodland Hills, Calif., has been impressed with the value and taste of McDonald's attempts at premium drip coffees and iced coffees. Now he's looking forward to sampling the company's lattes and mochas to see if they merit more frequent visits.

"I think their addition could bring me into the store," he said. "And I would definitely be likely to go in and try it."

If McDonald's can persuade its franchisees to sign on, analysts say it can likely thrive in the growing $12 billion specialty coffee market, which includes both brewed coffee and beans.

About one in five Americans drinks some kind of espresso-based coffee each day, and the market is supposed to grow by at least 4 percent each year until 2011.

"With coffee gaining so much ground, McDonald's almost has to go there," said Sharon Zackfia, a restaurant and retail analyst with William Blair & Co. "The feeling that the coffee business is a single pie and everyone is fighting for different slices doesn't seem to acknowledge that the pie is growing."

In response, companies are scrambling to offer more steamy drinks and snacks.

Dunkin' Brands Inc. added espresso beverages to Dunkin' Donuts shops in 2003 and credits the full-line of coffee drinks with helping its aggressive growth plans.

And Canadian coffee chain Tim Hortons, which is expanding its own U.S. presence, said customer demand for one-stop food and coffee shopping is growing.

"I think we're all now competing in the same space," said spokeswoman Rachel Douglas. "I think the lines are blurring, and I think consumers are demanding that."

A full-court press by McDonald's couldn't come at a worse time for Starbucks Corp., the world's largest chain of coffee houses, which is struggling with rising dairy prices, growing competition and flattening store traffic in the U.S.

In a conference call with analysts last week, executives with Seattle-based Starbucks said they welcomed the competition. Then they threw in a subtle jab.

"We understand all too well that we have built a very attractive business for others to look at and try and take away, whether it's 1 percent on the margin or big companies that are trying to take more," Starbucks Chairman Howard Schultz said. "We are up for the defense and we are going to get on the offense."

McDonald's first launched its so-called premium coffee about 18 months ago, followed by limited tests of sweet tea and iced coffee. Since then, it has added the specialty coffee drinks at about 800 U.S. stores, and it announced Tuesday that it intends to add the beverages to locations nationwide by early 2009.

A Starbucks spokesman declined to comment on the news, offering a company statement that it remains "focused on exceeding ... customers' expectations."

In a seemingly coffee-saturated society, there's little chance of a full-fledged coffee war between McDonald's, Starbucks and the myriad of other coffee purveyors like Dunkin' Donuts and Caribou Coffee Co.

"I think that they appeal to two different types of customers," said Morningstar analyst John Owens. "I think there's room for both McDonald's and Starbucks to be successful in selling coffee. This isn't something where one is going to be completely victorious over the other."

AP Business Writer Elizabeth M. Gillespie in Seattle contributed to this report.

[Algorithmic Gamma]

SBUX is definatly cheap. I don't like their fundamentals though. I want them to have more cash. Gross, pre-tax, and net profit margins are all below the 5 year average. Pre-tax and net profit margins are both below industry averages. SBUX needs to improve their balance sheet and margins before I put any money into them...
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[HenryTo]

SBUX down 5% in AH trading:

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7bE92AA773-C093-4DCD-98E2-1C99C285F8BA%7d&siteid=yhoo&dist=yhoo

[HenryTo]

FYI: Earnings preview for Starbucks:
--------------------------------------------------------------------------------

Earnings Preview: Starbucks Corp.
Tuesday November 13, 3:31 pm ET
Analysts Say Starbucks Likely to Report Positive Traffic in Fiscal 4th Quarter

NEW YORK (AP) -- Starbucks Corp. reports earnings for the fiscal fourth quarter on Thursday. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: Starbucks, the world's largest specialty coffee retailer, began the quarter in July by announcing a price increase of 9 cents on drinks to help offset higher dairy costs that have threatened to cut into profit. The hike bumped the cost of most drinks by about 3 percent.

The high dairy costs had already led the company to warn it may not reach the high end of its earnings-per-share forecast for the year.

Dairy costs have gone up partly because of higher costs for both fuel and feed. If farmers have to pay more to feed cows and transport milk to producers and companies, they charge more for the product. International demand for milk has also driven prices up this year.

The retailer may also be seeing traffic slow at many of its U.S. restaurants, even as global locations post traffic and sales gains. In its last quarter, the company reported purchases grew less than 1 percent in the U.S. and 5 percent globally.

Also in the quarter, Starbucks named Martin Coles as chief operating officer. The post is a new one at the company. Coles was previously president of Starbucks Coffee International.

BY THE NUMBERS: Starbucks has not offered any guidance for the quarter. Analysts polled by Thomson Financial expect earnings of 21 cents per share on revenue of $2.43 billion.

For the year, the company expects to earn between 87 cents and 89 cents. Analysts predict profit of 87 cents per share on revenue of $9.40 billion for the full year.

ANALYST TAKE: Deutsche Bank analyst Marc Greenberg said in a note to investors that higher costs for milk, coffee and labor aren't likely to fully offset "gross margin strain" in the fourth quarter.

Greenberg said the company is also facing more competition from fast food operators like McDonald's Corp., which offer premium coffee at lower prices.

He said consumers struggling with high gas prices and a weak housing market may find a $4 latte just too expensive.

"The anxiety breached by the sub-prime mortgage crisis -- many first-time home-buyers are facing very expensive mortgage resets which may drive foreclosures -- appears to be impacting even low-cost indulgences like coffee purchases," he added.

WHATS AHEAD: Starbucks plans to open another 1,700 new locations in the U.S. in fiscal 2008 and will add 900 new stores abroad.

STOCK PERFORMANCE: Shares dropped 39 percent during the past 52 weeks.

[rffrydr]

Bringing in a "premium" chocolate line with Hersey's--who's getting squeezed by dairy amongst others:

http://www.azcentral.com/business/articles/0719biz-hershey19-ON.html
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

I don't drink the stuff but am not suprised it doesn't exceed the cut; nor that MD's can comapare. Thanks to SBUX (and Vietnam) the beans are getting taken care of down in Juan Valdez country.

Ironic just as SBUX is confirming its role as the new McDonalds with it's "gourmet" egg-mcmuffin, MDees is scoping SBUX on coffee! The MD's in Argentina are all "cafes" where coffee comes first. And in Switzerland they use Guyere cheese on the Big&Tasty.


I use that wireless through ATT all the time--big problem though, no outlet!
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Today is the Tomorrow you worried about Yesterday!

[nodoodahs]

[rffrydr]

McDonald's iced coffee doing gangbusters. Coffee already won taste tests over SBUX. Looks like its the new Starbucks for the caffeine-addled, mortgage impaired consumer.
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

First day not down in 10.
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Today is the Tomorrow you worried about Yesterday!