LIVE TV
ZEE Business
ZEE BUSINESS
हिंदी में पढ़ें  हिंदी में पढ़ें
Live TV
Live TV
  • Home
  • Budget 2021
  • Personal Finance
    • PPF
    • Mutual Funds
    • Income tax
    • EPFO
    • Income Tax Calculator
    • Personal Loan Calculator
    • Car Loan Calculator
    • Home Loan Calculator
    • SIP calculator
    • SWP Calculator
    • MF Returns Calculator
    • Lumpsum Calculator
  • India
    • Companies
    • Property
    • Startups
    • Uidai
  • Economy
    • Aviation
  • Tech
    • Mobiles
    • Apps
  • Auto
    • Cars
    • Bikes
  • Markets
    • Commodities
    • Currency
  • Jobs
  • Indian Railways
  • World
    • Economy
    • Politics
    • Markets
  • videos
  • photos
  • Authors
  • More ...
    • VIDEOS
    • PHOTOS
Read in App
Business News » World News

Wall Street says Starbucks has too many stores, prices too high

  • Twitter
  • Facebook
  • Linkedin
  • whatapp
  • View in App
Updated: Sat, Feb 03, 2018
06:34 am
Reuters
RELATED NEWS
Infosys Chairman Nandan Nilekani on India's Digital Economy I Kotak Institutional Equities highlights details Infosys Chairman Nandan Nilekani on India's Digital Economy I Kotak Institutional Equities highlights details
Digital economy to outpace GDP growth, will result in 'competitive advantage period' for leaders in digital space highlights ICICI Securities Digital economy to outpace GDP growth, will result in 'competitive advantage period' for leaders in digital space highlights ICICI Securities
#GSTMakeItEasy: Facing GST related issues? Big initiative by Zee Business - Tweet your problems now! Check all details here #GSTMakeItEasy: Facing GST related issues? Big initiative by Zee Business - Tweet your problems now! Check all details here
India’s economy picking up steam, estimate recovery at 10% in FY22: S&P Global India’s economy picking up steam, estimate recovery at 10% in FY22: S&P Global
RBI Monetary Policy: Governor Das says repo rate unchanged, sees GDP at 10.5 pct for FY22, inflation at 5.4 pct for Q4FY21 RBI Monetary Policy: Governor Das says repo rate unchanged, sees GDP at 10.5 pct for FY22, inflation at 5.4 pct for Q4FY21

Starbucks Corp has too many stores and its prices are too high, Wall Street analysts are starting to agree, as they seek to explain the company`s cooling U.S. growth.

The Seattle-based chain now has more U.S. locations than McDonald`s Corp but it has been struggling for more than a year to lure the traffic needed to deliver the robust growth investors expect.

Executives last week warned that 2018 same-store sales growth would be at the low end of its forecast. Starbucks reported a 2 percent U.S. quarterly same-store sales gain that fell short of expectations on flat holiday traffic. Two years ago, those sales jumped 9 percent. [nL2N1PK21T]

Starbucks has offered a laundry list of reasons for the deceleration in its domestic business, including weak retail traffic, changes to its rewards program, bottlenecks from a crush of mobile orders, and holiday merchandise and drink specials that failed to "resonate" with customers.

Executives concede that Starbucks` U.S. afternoon business has dragged down results in its most important market.

Still, they say that Starbucks - which had 14,163 U.S. locations at year-end, 25 percent more than five years ago and 127 more than McDonald`s - is not cannibalizing its own sales or losing share in a market crowded with coffee sellers ranging from independent cafes to fast-food chains and convenience stores.

Analysts disagree. After a recent analysis of restaurant industry trends, retail traffic and other factors, Bernstein analyst Sara Senatore solidified her view that "excess unit growth, at a time when Starbucks is reaching a more mature stage of growth, is the root cause" of the company`s domestic woes.

"Rather than a litany of excuses, we believe this is best explained by overcapacity in the industry," said John Zolidis, president of Quo Vadis Capital, a Paris-based boutique research firm. "Starbucks is contributing to the problem by opening new units."

Credit Suisse analyst Jason West said the brew of stepped-up competition combined with Starbucks` recent opening of roughly 700 U.S. stores a year, weighs on its "ability to re-accelerate growth."

Starbucks said on Friday its new cafes perform well and bring more business to all nearby coffee shops, not just its own.

Proliferation of stores is not Starbucks` only problem, according to analysts. Zolidis also sees another troubling sign: "We believe the company has raised prices too much."

Starbucks on average is increasing prices 1 to 2 percent on an annual basis, while offering discounts through its rewards program, spokesman Reggie Borges said.

Maxim Group analyst Stephen Anderson, who tracks coffee prices in 10 markets in the U.S. Northeast, including New York, Boston and Washington, said that McDonald`s - now selling $1 coffee and $2 small espresso drinks - has kept prices mostly flat for the last two years.

Anderson said that Dunkin` Donuts, owned by Dunkin` Brands Group Inc , has raised prices by roughly 1 percent per year, while Starbucks has increased prices by about 3.5 percent each year. The analyst added that the rivals may be peeling off some of Starbucks` less-affluent customers.

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)

Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.

TAGS:
Economy
RELATED NEWS
Infosys Chairman Nandan Nilekani on India's Digital Economy I Kotak Institutional Equities highlights details Infosys Chairman Nandan Nilekani on India's Digital Economy I Kotak Institutional Equities highlights details
Digital economy to outpace GDP growth, will result in 'competitive advantage period' for leaders in digital space highlights ICICI Securities Digital economy to outpace GDP growth, will result in 'competitive advantage period' for leaders in digital space highlights ICICI Securities
#GSTMakeItEasy: Facing GST related issues? Big initiative by Zee Business - Tweet your problems now! Check all details here #GSTMakeItEasy: Facing GST related issues? Big initiative by Zee Business - Tweet your problems now! Check all details here
India’s economy picking up steam, estimate recovery at 10% in FY22: S&P Global India’s economy picking up steam, estimate recovery at 10% in FY22: S&P Global
RBI Monetary Policy: Governor Das says repo rate unchanged, sees GDP at 10.5 pct for FY22, inflation at 5.4 pct for Q4FY21 RBI Monetary Policy: Governor Das says repo rate unchanged, sees GDP at 10.5 pct for FY22, inflation at 5.4 pct for Q4FY21

LATEST NEWS

Stock Market Outlook: Focus will be on these - Check what share bazaar experts, analysts opined

Life Insurance Coverage Calculator: Simple cover calculation in just 3 steps - EXPLAINED

Listing facilitation! Ahead of LIC IPO, authorised capital boost of Rs 25,000 crores - All you need to know

Announcement LIVE: IIT JEE Main 2021 Result February - Date, time, declaration on NTA website direct link jeemain.nta.nic.in, download answer key, score checking and more

West Bengal Elections: PM Narendra Modi launches blistering attack on Mamata Banerjee - Top quotes

Rakesh Jhunjhunwala stocks: This Big Bull-owned MULTIBAGGER has delivered more than 42 pct in less than two month

Framework Agreement! India Grid Trust inks largest transmission deal with Sterlite Power

Mumbai-Ahmedabad Bullet Train: Tech bids open for bridge project - Check latest news development

Super hi-tech driverless pod taxis for Noida Aiport! Check Yogi Adityanath government's big plans for Jewar

US continues to see drop in new Covid cases

  • India News
  • World News
  • Companies News
  • Market News
  • Personal Finance News
  • Technology News
  • Automobile News
  • Small Business News
  • Income Tax Calculator
  • Live TV
  • Videos
  • Photos
  • Author
  • Rss Feed
  • Advertise with us
  • Privacy Policy
  • Legal Disclaimer

Latest Trending Updates

  • EPFO
  • Budget 2020
  • Income Tax Return
  • Auto Expo 2020
  • Home Loan
  • Business News

Trending Topics

  • Income Tax
  • income Tax Calculator
  • 7th Pay Commission
  • Reserve Bank of India
  • GST
  • Latest Business News

Follow us on

zeebiz
zeebiz

Partner Sites

  • Zee News
  • Hindi News
  • Marathi News
  • Bengali News
  • Tamil News
  • Malayalam News
  • Gujarati News
  • Telugu News
  • Kannada News
  • DNA
  • WION
Copyright © Zee Media Corporation Ltd. All rights reserved