Brian Niccol Could Be Starbuck's Answer
By Jim Bauer
@porwest (91088)
United States
August 17, 2024 8:57am CST
I am not a fan of Starbucks coffee, but I am a fan of successful businesses, and certainly one can make the claim that Starbucks is an example of one of them. That being said, over several years the performance of the company has been rather boring—perhaps due to many alternative choices in the "fancy" coffee category or just a model that has become a bit stale.
Scooters is perhaps now one of the fastest growing coffee chains in America, although its size pales in comparison.
But both McDonald's and Dunkin Donuts have also given Starbucks a considerable run for their money. So, needless to say, Starbucks has some work to do to restore the brand and bring back customer enthusiasm for its products.
Howard Schultz, one of the original Starbucks guys, came back for a bit and tried to do that. But he couldn't get it done.
Recently it was announced that they would bring on Chipotle CEO Brian Niccol, and I think this presents a very interesting development considering what Brian Niccol was able to do with the Chipotle brand.
Prior to that, Brian Niccol was the CEO of Taco Bell, and took over at a time when the company was facing many hurdles. He turned Taco Bell around to great success.
And Brian Niccol was at the helm as well, at Chipotle, during some very trying times, contending with food-borne illnesses from his restaurants among other things. What would have been the death knell for any other chain, Brian Niccol was able to quickly overcome.
During Niccol's tenure at Chipotle, the company's revenue doubled and the stock soared 800%.
So, it makes me take a harder look at Starbucks as an investment considering Niccol's track record. Granted, third time's a charm as they say. Can he repeat the successes of Taco Bell and Chipotle? I think he can, actually.
It's certainly a stock worth watching very closely.
8 people like this
7 responses
@moffittjc (121604)
• Gainesville, Florida
18 Aug
I used to have a daily addiction to Starbucks, mostly because of location convenience more than anything else, but these days I get my coffee from two different local coffee shops that have opened up. I think there is some potential for Niccol to turn things around, but there sure is a lot of competition in the coffee industry these days. It will be interesting to see what he can do with the company.
1 person likes this
@porwest (91088)
• United States
19 Aug
I can't tell you the last time I have ordered a coffee from anywhere. I drink it in the morning, hardly ever during the day, and just cannot bring myself to pay for a single cup what I could spend on my own and make about 100 cups. On average I pay about $10-$12 for a can of coffee and a can will get me 300-400 cups of coffee. lol
2 people like this
@porwest (91088)
• United States
20 Aug
@JimmyDeen I think if they offered more culinary treats and other things, it could drive more business for sure.
2 people like this
@JimmyDeen (252)
•
20 Aug
@porwest Starbucks has fancy drinks. And they should include more of those delicious pastries like cranberry cakes. Pastries make the cafe.
2 people like this
@porwest (91088)
• United States
17 Aug
Did you miss the part where I said, "Revenue doubled?" You don't double revenue because people stop eating at your restaurants. And if people stop eating at your restaurants, your stock doesn't perform well either.
Here is a chart which I have drawn a red trend line on. Despite some hiccups in 2022 and 2023, Chipotle stock is all up on the trend line on 5-year chart.
Granted, the stock is down a bit from its 52-week highs recently, but that's due to inflation driving consumers to other dining choices, including cooking more at home. But it's not indicative of Chipotle separately. It is a trend that is happening across the entire industry.
As for Taco Bell, tens of millions of people disagree with you, and of YUM! Brands, which owns KFC, Taco Bell and Pizza Hut, Taco Bell is their top performing restaurant.
1 person likes this
@NJChicaa (119649)
• United States
17 Aug
@porwest I literally don't care if millions of people disagree with me about Taco Bell. It is gross. There is no accounting for taste.
From what I've seen/read Chipotle has been struggling with the E. coli food poisoning, smaller serving sizes, increased prices, etc. I'm not in a huge rush to go there and it is right around the corner from where I work. I thought I read that they were closing stores but that could have been one of my fever dreams.
In any case I don't go to Starbucks. Their coffee tastes burned to me. The chain can fall off of the face of the planet for all I care. If I want a cold brew I go to Dunkin.
1 person likes this
@porwest (91088)
• United States
17 Aug
@NJChicaa Apparently you are really, really late to the party. But Chipotle OVERCAME the food borne illness issue. In fact, BIG TIME. It not only recovered, the stock SOARED following that event. Increased prices HAVE been an issue. But that's been an issue across the board due to inflation, higher wages and other factors that ALL restaurants in the quick-service sector have been up against. The smaller serving size issue was also proved to be "fake news" driven by TikTokkers, but was debunked as false.
As for Starbucks and Chipotle, I am not a customer of either. But I wasn't speaking in terms of my personal thoughts about their products, but rather in terms of their BUSINESS and PERFORMANCE.
By comparison, look at Starbuck's chart. It's FLAT for the past 5 years. What I am looking at in terms of an investment decision is whether or not Niccol can break that cycle and send the stock upward. I think he can. So whether or not the coffee is good, I am looking at the business. Not their coffee.
You have to also keep in mind, Schultz never said his coffee was good. In fact, he once said there was nothing special about his coffee. "It's not even that good. We're not selling coffee," he said, "We're selling an experience."
1 person likes this
@JESSY3236 (19942)
• United States
20 Aug
I don't drink coffee, but I agree it will be interesting of what he would do for Starbucks.
1 person likes this
@2ndchances24 (8980)
• Cloverdale, Indiana
17 Aug
I don't keep track of the stock market so if you think it's a good idea then
I say go for what you feel in your gut & wish you all the best luck with it.
1 person likes this
@porwest (91088)
• United States
20 Aug
@JimmyDeen Me? I own several companies. Among some of my top holdings are Ford, Amazon, Walmart, Verizon, Realty Income, Kroger, and through several ETFs, I hold shares in a multitude of other large companies like Alphabet, Facebook, Coca-Cola, Target, 3M, Proctor & Gamble, Miller Coors, it's quite a list.
1 person likes this
@JimmyDeen (252)
•
20 Aug
If he turned chipotle around and they're popular these days, he can surely do this for Starbucks.
1 person likes this
@LindaOHio (178877)
• United States
18 Aug
There is always a long line for Taco Bell in our neighborhood. Not so much for the other fast-food chains. Good luck and have a great day.
1 person likes this
