Starbucks Turnaround Plan: Analyst Brian Harbour on Earnings, New Model, and China Strategy

Starbucks's Turnaround Progress

• 💡 Despite reporting a sixth consecutive quarter of declining same-store sales, Starbucks's CEO believes the company's turnaround is ahead of schedule.
• 🚀 The CEO is accelerating the rollout of a new operating model, suggesting positive results from initial testing.
• 🎯 The company plans to shutter mobile-only operations, emphasizing the continued importance of the in-store experience.

Financial Outlook and Cost Reduction

• 📈 Morgan Stanley has a price target of $103 for Starbucks stock, with a bull case scenario reaching the $130s.
• 💰 The company is heavily incentivized to reduce costs, as the current cost base is considered too bloated.
• ✅ Successful cost reduction over the next one to two years could lead to significant upside to earnings.

Competitive Landscape: Luckin Coffee and China

• ☕ Luckin Coffee, primarily a mobile pickup concept, is seen as not a broader threat to Starbucks in the US, unlike its impact in China.
• 🌏 In China, Starbucks is likely to bring in a new majority partner with local market knowledge, a model preferred by other major restaurant chains.
• 🌟 The brand remains well-respected in China, and the company believes in the future of the brand there.