Starbucks is about to release earnings. Ponder if this Bear Case Scenario is elegantly packaged:
Customers can and do switch easily. If the line is too long you go somewhere else that better suits your time management challenge.
Labour costs and commodity costs are volatile. Productivity is hard to come by. How much faster can a barista pour your dark roast or heat up your breakfast sandwich. Watch for backward integration as Starbucks buys coffee plantations in politically volatile regions. Capital will be at risk.
Starbucks will expand its Brands into new area’s and runs the risk of losing focus as it grapples with new businesses and new dynamics.
Alcohol will change the nature of the business and cause it to be regulated differently.
George Gutowski writes from a caveat emptor perspective.