Remember when coffee giant Starbucks (SBUX) was bringing out drinks involving olive oil? Sounded like a crazy idea back then, really. But apparently, reality caught up with Starbucks, and now, the olive oil beverages are out the door starting early next month. This was good news for investors, who sent shares up fractionally in Wednesday afternoon’s trading.
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The Oleato–which means “with olive oil”–drinks were a product of the pre-Brian Niccol era, and the new CEO’s interest in simplifying the menu likely extended to removing drinks that had olive oil. The fact that some customers took to social media to complain about certain, ah, “side effects” that come from drinking coffee and olive oil at the same time likely did not help matters either.
At the time, Starbucks believed that the combination of coffee and olive oil would not produce a new kind of laxative but, rather, would be a “game-changer.” Those who desperately want to continue, meanwhile, will find the Oleato drinks are still available in Japan, China, and perhaps least surprisingly of all, Italy.
Drawing Back Interest
Starbucks is frantically trying to get customers back in stores. Recently, noted an NPR report, Starbucks revealed that its sales are down 6% in the most recent quarter against the same time last year. That makes this the worst quarter Starbucks has seen since the pandemic, when many Starbucks locations were closed by government mandate.
Niccol’s plan to turn that around, meanwhile, seems to remain as-is: simplify the menu—no more olive oil in the coffee—and improve the ambiance to make Starbucks a “community coffeehouse” once more. I would suggest adding power outlets and making it more accommodating for remote workers, but Starbucks, in general, seems less than pleased with that notion. That much is clear from its recent issuance of a return-to-office mandate.
Is Starbucks Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SBUX stock based on 15 Buys, seven Holds, and three Sells assigned in the past three months, as indicated by the graphic below. After an 8.44% rally in its share price over the past year, the average SBUX price target of $101.60 per share implies 4.21% upside potential.
