Starbucks Corporation (SBUX): Should I Buy?

Americans love their coffee, and there’s no company that’s made that fact more apparent than Starbucks Corporation (NASDAQ:SBUX). The company operates or licenses 1,300 stores in the Americas region, with a total operation of almost 19,000 locations worldwide. Cafe success has made Starbucks a fantastic stock over the last few years, with shares up 24% over the last 12 months and 275% over the last five years.

Even with all that growth — and a P/E that’s grown to almost 33 — Starbucks Corporation (NASDAQ:SBUX) still has a lot to offer investors. The three reasons I want to focus on today are the company’s plans for expansion, its food offerings, and the continued growth of single-serve home brewing. Combined, they make an impressive case for this impressive brand.

Continued expansion
A chicken in every pot and a Starbucks Corporation (NASDAQ:SBUX) on every corner — the American dream. Even with its huge base, Starbucks is still planning to add another 1,300 locations around the globe this year. And that’s just locations under the Starbucks brand. Teavana will contribute another 350 locations, which includes 337 that were acquired when the company was purchased at the start of the year.

The push for more real estate is partially a push toward drive-thru capability. On the company’s last earnings call, Americas president Cliff Burrows said that the company’s “drive-thru stores have healthy profit margins as [it’s] able to better leverage fixed occupancy costs and depreciation with sales coming from both out of the window and in the cafe.”

Additional drive-thru locations should help Starbucks continue to compete with McDonald’s Corporation (NYSE:MCD)‘ McCafe line, which has been generating lots of good news for the burger chain. McDonald’s Corporation (NYSE:MCD) recently announced that it was hiring 2,000 baristas for its operations in China, and increasing the number of McCafe locations by 45% over the course of 2013. More drive-thru locations should help Starbucks compete with the fast-food giant in the U.S..

New food offerings
On top of its new locations, Starbucks Corporation (NASDAQ:SBUX) has been increasing its food offerings. The La Boulange bakery brand that Starbucks purchased last year is now in over 425 locations, and the company is going to expand on that throughout 2013. Starbucks has called food one of the “near and long-term growth [drivers] for the Americas.”

Along with helping it compete with the aforementioned McDonald’s, food is really going to help Starbucks fight the Panera Bread Co (NASDAQ:PNRA) threat. Panera Bread Co (NASDAQ:PNRA) has seen fantastic growth recently, with revenue up 13% and comparable sales growing 3% last quarter. One of the chain’s biggest draws is the combination of food and coffee, which has been lacking at Starbucks. An increase in food offerings could help Starbucks Corporation (NASDAQ:SBUX) hold on to customers that it would have otherwise lost to Panera Bread Co (NASDAQ:PNRA) for lunch.