Too many Starbucks outlets has them cannibalising themselves
Shares of Starbucks have dropped 4.4% this year, after falling 7.5% last year — possibly because the US market is saturated
New York/ Washington — It’s only a joke that there’s a Starbucks on every corner, but the proliferation of the cafés is hindering the company’s growth, according to a recent report from BMO Capital Markets.
Andrew Strelzik, an analyst at the bank, downgraded Starbucks recently and lowered his price target on the stock, arguing that the abundance of locations in the US means that stores are stealing sales from each other and weighing down the company’s results.
Competitor Dunkin’ Donuts is also suffering from a saturated US fast-food market, and recently lowered its new-store target. There are more than 13,000 Starbucks outlets in the US, including 240 in Manhattan. Dunkin’ has 161 locations in the borough, though it has more locations than Starbucks in the whole of New York City.
The tough fast-food competition in the US has pushed Starbucks to increasingly target China as a key growth market.
Shares of the company have dropped 4.4% this year. The stock fell 7.5% in 2016. Dunkin’ Brands Group shares are roughly flat for 2017.