Its more than just coffee!. Buy Recommendation By: Thomas Ezra. Who is Starbucks?. Starbucks Corporation is the largest coffeehouse chain in the world holding more than 12,000 stores worldwide and serving over 40 million people a week.
By: Thomas Ezra
Starbucks Corporation is the largest coffeehouse chain in the world holding more than 12,000 stores worldwide and serving over 40 million people a week.
“Starbucks Corporation engages in the purchase, roasting, and sale of whole bean coffees worldwide. The company offers brewed coffees, espresso beverages, cold blended beverages, various complementary food items, coffee-related accessories.”
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"(We) believe the roughly 28 percent sell-off since mid-November has created an attractive entry point for long-term investors," Glen Petraglia, an analyst with Citigroup, wrote in a recent research note.
"If [consumers] see McDonald\'s has a good cup of coffee, you are going to find some people who will switch," said Howard Penney, an analyst with Prudential Equity Group.
Some analysts forget that Starbucks is selling more than just a cup of coffee. They have become the social hang out of our era. There is brand loyalty (Ipod)
Just this week, Starbucks released ex-Beatle Paul McCartney\'s newest album, making him the first artist released on the company\'s new Hear Music record label.Starbucks’s Products
Historically Starbucks has been involved in domestic growth.
However, the domestic growth opportunity is shrinking.
International sales is the name of the game for Starbucks.
Currently, Starbucks operates in 37 countries.
Furthermore, Ed Schultz has set a long term goal of reaching 20,000 stores domestically, and 20,000 stores internationally.
During fiscal year 2007 Starbucks is expecting to erect another 2400 stores internationally.Revenue Growth
The business has been pretty reliable, meeting or topping Wall Street earnings forecasts for the past eight quarters.Analysts Estimates
- There is significant threat of entry into this market. Starbucks is know to acquire their local competition and has been successful in doing so. There are few barriers to entry, however Starbucks is creating barriers through innovative coffee flavors. in the industry.
- Buyers are addicted and don’t know it. After looking at the consumption levels its clear price sensitivity is low. Furthermore, quality is a significant factor in this industry.