This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Starbucks Daily Customer Visits Expected to Rise

NEW YORK ( TheStreet) -- The average number of daily customers who visit a Starbucks (SBUX - Get Report) store decreased from an estimated 463 in 2005 to 408 in 2007, driven by the launch of lower priced beverages by players like McDonald's (MCD - Get Report) (NYSE:MCD), as well as due to self-cannibalization of Starbucks stores.

Starbucks faces competition from other specialty coffee manufacturers such as Caribou Coffee (CBOU) and Peet's Coffee (PEET). We believe that long-term economic improvement will help Starbucks limit the impact of price competition and that the company will be able to increase its average daily customer visits as it continues to limit store count by shutting down underperforming stores.

Cheaper Priced Beverages From Competitors

Fast food chains such as McDonald's have been cutting into Starbucks' customer segment by offering lower priced beverages. This had the impact of attracting price conscious customers particularly during recessionary times. In the long run, we believe that the market will make space for both types of business models: one for price conscious customers and the other for those who prefer premium quality at a higher price. Customers seeking the latter are likely to continue visiting Starbucks' stores.

Self-Cannibalization Impacting Customer Base

By the end of fiscal year (FY) 1999, Starbucks had nearly 2,500 stores, but by FY 2007 this figure jumped to more than 8,500. The firm had added 612 net stores at an average of about 1.7 per day in FY 1999. This number nearly doubled in FY 2007 when the firm added 1,342 net stores at an average rate of 3.7 per day. The larger store count has lead to some self-cannibalization and Starbucks is addressing the problem by shutting certain stores.

Starbucks underwent a business restructuring in 2008-2009, closing down more than 890 underperforming stores. As the firm rethinks its strategy, we believe this could help increase the average customer base per store going forward.

The average of Trefis member forecasts for number of daily customers per store indicate an increase from around 468 in 2010 to 575 by 2016, compared to the baseline Trefis estimate of an increase from 434 in 2010 to 531 by the end of the Trefis forecast period. If the member estimates are indeed true, it would imply an upside of 6% to the Trefis price estimate for Starbucks' stock.

You can drag the forecast trend-line above to express your own view, and see the sensitivity of Starbucks's stock to the number of daily customers per Starbucks' store.

Our complete analysis for Starbucks's stock is here.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
MCD $130.32 0.80%
SBUX $56.16 -0.16%
AAPL $92.46 -0.84%
FB $119.14 1.10%
GOOG $710.08 1.20%


Chart of I:DJI
DOW 17,728.75 +68.04 0.39%
S&P 500 2,055.44 +4.81 0.23%
NASDAQ 4,727.7440 +10.65 0.23%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs