Starbucks Corporation (SBUX - Analyst Report) has introduced a curbside pickup facility which will save its customers the trouble of getting out of their vehicles or even waiting in long queues to collect their orders. Notably, the service has only been tested in Snoqualmie, WA.
This initiative is an extension of the brand’s mobile app ordering system. To date, customers have been placing orders and making payments through the app. The orders were then picked up from the cafeteria, which helped customers save time. However, the curbside delivery service is going to ease the process further as the order will be delivered to the customer vehicle by an attendant.
However, this service may result in traffic congestion, especially in stores with a drive-thru facility. Starbucks stores are packed most of the times, especially during peak hours.
Starbucks expects its digital initiatives to fuel stronger sales in the Americas in the next quarter. We note that third-quarter fiscal 2016 sales increased 7% year over year as higher sales in China and the Channel Development segment counterbalanced a slowdown in the U.S. and Europe.
Same-store sales (comps) grew 4%, less than 6% recorded in the previous quarter, due to soft global traffic trends. Global traffic was flat in the quarter, comparing unfavorably with the 2% increase in the previous quarter. Average ticket growth remained unchanged at 4% in the quarter.
Meanwhile, it is to be seen whether this new facility will drive demand for the world’s largest coffee-shop chain.
Starbucks currently carries a Zacks Rank #4 (Sell).
Stocks to Consider
Better-ranked stocks in the sector include Restaurant Brands International Inc. (QSR - Snapshot Report) , Brinker International, Inc. (EAT - Analyst Report) and Buffalo Wild Wings Inc. (BWLD - Analyst Report) .
Brands International’s earnings are expected to increase 37.5%. It sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Buffalo Wild Wings is expected to witness 48% increase in earnings and carries a Zacks Rank #2 (Buy). Brinker International’s -- a Zacks Rank #2 stock -- fiscal 2017 earnings are expected to decline 2.6%.
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