Pros and Cons of Buying Starbucks

Pros and Cons of Buying Starbucks Stock

John Divine | Yahoo Finance/U.S. News & World Report | November 11th, 2019

Last quarter, global net stores grew by 7% year-over-year, rising from 29,324 to 31,256. That’s a healthy clip, and while the U.S. market may be saturated for Starbucks, the big opportunity comes overseas, especially in China, where the store count grew 17% year-over-year.

“As China creates a larger middle class, their appetites will mature toward eating more meat and potentially shift from a tea-drinking society to coffee, much like we’ve seen in Starbucks’ expansion in Great Britain,” says Sam G. Huszczo, owner of SGH Wealth Management in Southfield, Michigan.

The second financial metric every restaurant investor watches like a hawk is same-store sales, which, in the case of SBUX, grew by 5% last quarter. The only way to grow comparable sales is via more transactions, higher prices, or some combination of the two. Both domestically and abroad, Starbucks achieved this growth through a combination of both factors, which is a good sign that shows consumers are willing to tolerate modest growth in prices.