Admittedly, Starbucks (NASDAQ:SBUX) has seen better days. The coffee chain is not what it once was, and cries of “commoditization” have risen up around it. But Starbucks has a plan to improve, and details of the plan recently dropped. Investors, however, were skeptical, and sent shares down modestly in Monday afternoon’s trading.
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The centerpiece of the plan, reports note, is the “Siren Craft System,” a reference to the Starbucks logo. It’s already in place at over 1,000 of its 10,000 locations, reports note, and will go completely live by the end of this month throughout North America. Siren Craft changes the order of production for drinks, and is expected to speed things up, thus making workers’ jobs easier and improving the customer experience.
With store sales down 3%, and store traffic down 7%, in the second quarter, it was clear something needed to be done. Starbucks wanted to improve flexibility, and give staff a better chance to react and even anticipate unexpected issues that crop up in the process. Siren Craft, it’s hoped, will help provide that slack and flexibility.
Trouble in the Brand
Starbucks is going to need that help no matter what. New reports suggest that Starbucks’ line of iced energy drinks are “low-wattage,” suggesting that they don’t do a great job of energizing buyers. That’s not a good sign from a chain that democratized caffeine access.
It also doesn’t help that Starbucks is suffering from labor troubles, and not just employees out to unionize. One employee recently examined the pastry case, revealing that the area generates a significant amount of food waste daily. Since Starbucks uses live pastry to show what’s available—as opposed to pictures instead—Starbucks ends up throwing out these “demo models” every day.
Is Starbucks Stock a Buy, Sell or Hold?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SBUX stock based on nine Buys and 18 Holds assigned in the past three months, as indicated by the graphic below. After a 20.41% loss in its share price over the past year, the average SBUX price target of $88.63 per share implies 15.09% upside potential.
