Multiple Growth Drivers for Starbucks Corporation (SBUX)

Page 1 of 2

Starbucks Corporation (NASDAQ:SBUX), as the premiere roaster and retailer of specialty coffee in the world, continues to extend its commitment to wellness and will include calorie information on menu boards at all company-operated and licensed U.S. Starbucks stores starting June 25. By raising its standards, Starbucks Corporation (NASDAQ:SBUX) also delivers solid results for its shareholders.

Starbucks Corporation (NASDAQ:SBUX)

The company is targeting to deliver 10%+ revenue growth on a sustainable annual basis. Starbucks Corporation (NASDAQ:SBUX) has achieved between 12% and 14% revenue growth in 2012, and expects to deliver between 10% and 13% revenue growth by the end of the year. As for earnings, Starbucks is aiming for 15% to 20% sustainable growth, whereas the company has delivered compound growth rate and earnings of 19% over the past three years.

What is Starbucks doing?

Starbucks Corporation (NASDAQ:SBUX) continues to work on the food quality and innovation to pursue two opportunities: attach more food to the existing transactions and attract new customers into the stores. On the beverage end, the company continues to focus on beverage innovation, such as the Hazelnut Macchiato and Vanilla Spice Latte, which helped improve incremental comps by about two points in Q2.

In addition, the management also sees great opportunity for drive-through as the company continues to improve its drive-through operation. Lastly, with the acquisition of Teavana, it provides Starbucks Corporation (NASDAQ:SBUX) three growth opportunities: open new Teavana stores with stronger offerings, use tea as a growth driver in the Starbucks stores, leverage into consumer packaged goods (CPG) channels over time with Teavana.

Home consumption

As the coffee consumption at home becomes more convenient and easier, Starbucks is innovating aggressively into the home space with packaged coffee. While most consumption at home in the U.S. is in the low-pressure brewed category, Starbucks’ partner Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) has successfully penetrated the market with its Keurig system. Starbucks sees higher consumption of coffee driven by single-serve executions and intends to provide coffee on other platforms. By recognizing itself not as an equipment company, Starbucks will continue to strengthen its relationship with Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) to grow into the home space.

Competitions

As Starbucks continues to drive into food area, the competition against McDonald’s Corporation (NYSE:MCD) McCafé is expected to intensify. By introducing two new offerings, Blueberry Pomegranate Smoothie and Dulce de Leche Shake, McDonald’s Corporation (NYSE:MCD) continues to expand its offerings with new, great-tasting beverages and desserts. By optimizing its menu, modernizing the customer experience as well as broadening the accessibility, McDonald’s continues to post solid results, where its global comparable-store sales increased 2.6% in May. However, with differentiated offerings and core strengths, such as Starbucks’ premium coffee and McDonald’s burgers, both companies are finding ways to boost traffic and revenue.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 44 percentage points in 21 months Learn how!

Lists

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

12 Most Expensive Countries for Foreign Students

Top 30 Most Influential Women in the World

Top 20 Most Expensive New Year Eve Shows

Top 5 Best Vocational Careers

Top 10 Jobs for 2014 by Salary Gain (Predictions)

Top 5 Digital Trends for 2014

Top 6 Things You Can Do To Increase Your Productivity

Top 9 Trending Smartphones in 2013

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!