It’s been a year of good news for Starbucks Corporation (NASDAQ:SBUX), and this week’s announcement that Caribou Coffee is closing or rebranding a number of its locations is just one more good tiding. Caribou made the announcement that stores would be closing in certain regions starting on April 14. Some of those businesses will be permanently shuttered while others will switch over to Peet’s Coffee locations later this year. The company behind both Caribou and Peet’s is German holding company Joh. A. Benckiser, an investment vehicle for the Reimann family.
White ground to run
While the store closures are a nice touch, the real win for Starbucks Corporation (NASDAQ:SBUX) is the move to Peet’s locations, which goes some way to validating the moves Starbucks has made recently. Peet’s splits its focus between coffee and tea, and is a more upscale experience than Caribou. That aligns almost precisely with the Starbucks model, which recently added Teavana to its portfolio.
That acquisition is going to put more tea on Starbucks’ shelves, and give the company a stronger foot to extend into tea-heavy markets, like Europe. The addition will also help Starbucks differentiate itself from competitors like Caribou and Dunkin Brands Group Inc (NASDAQ:DNKN)‘ Dunkin’ Donuts chain. Dunkin’ has been on a tear recently, with comparable sales up 3% in the U.S. and operating margin surpassing 47% last quarter.
The tea addition should help Starbucks continue its strong growth. But the move from Caribou and Peet’s isn’t the only thing going Starbucks’ way recently.
Coffee fit for a king
In February, Starbucks’ Seattle’s Best Coffee brand became the new coffee for Burger King Worldwide Inc (NYSE:BKW). The collaboration should help Starbucks Corporation (NASDAQ:SBUX) compete with McDonald’s Corporation (NYSE:MCD) McCafe program, which has helped the burger-chucker increase revenue over the past few years. Last quarter, management said that work is continuing behind the scenes to keep McCafe as a driver of long-term growth.