Starbucks Corporation (NASDAQ:SBUX) is increasing traffic and ticket sizes, meaning each location and each man hour is producing more profit for the company. Innovations such as its mobile payment system help facilitate the flow of traffic.
Meanwhile, Panera Bread Co (NASDAQ:PNRA) suffers from tremendous in-store operational inefficiencies. Its traffic growth is slow despite large crowds showing up at lunchtime. As fellow Fool Demitrios Kalogeropoulos noted “the customer traffic was there, but service just wasn’t quick enough to satisfy it.” Furthermore, the company suffers from diminishing sales at breakfast, which Starbucks Corporation (NASDAQ:SBUX) and its new La Boulange baked goods will happily welcome into its stores.
Perhaps Panera Bread Co (NASDAQ:PNRA) ought to take a page or two out of Starbucks Corporation (NASDAQ:SBUX)’ book in order to get its restaurants operating more efficiently. While it did post a 60 basis point increase in operating margin last quarter, it guided for flat to negative operating margin growth in the second half of the year.
Starbucks Corporation (NASDAQ:SBUX), on the other hand, is operating extremely well, posting an operating margin of 16.4% last quarter. Part of the 150 basis point expansion was due to improved sales leverage (more sales, same resources), the other part was due to the falling price of coffee (as a commodity). I expect that trend to continue for some time, and Starbucks is poised, more so than its competitors, to capitalize on that trend with 75% of its sales coming from beverages.
Yes, Starbucks Corporation (NASDAQ:SBUX) just had a blowout quarter – a quarter that makes me want to proclaim my love for the company from a mountain top. Lacking a mountain top, I’ve chosen this outlet. But it’s not the numbers that make me so attracted to the company, it’s the reason behind those numbers – the “great, extraordinary, endeavoring company” that has the potential to post consistently great numbers. With great management and a strong growth plan, I think investors can still buy into Starbucks, even at an all-time high.
Adam Levy owns shares of Starbucks. The Motley Fool recommends McDonald’s, Panera Bread, and Starbucks. The Motley Fool owns shares of McDonald’s, Panera Bread, and Starbucks.
The article A Great, Extraordinary, Endeavoring Company originally appeared on Fool.com.
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