Is Starbucks Hurting Its Own Brand With Too Many New Stores?

LOS ANGELES (CBSLA.com) – Starbucks is opening so many new stores in the U.S. that it is threatening to reach market saturation, according to a report from a Wall Street investment firm.

A research report from BMO Capital Markets released Monday determined that the aggressive expansion model is putting so many Starbucks stores in close proximity to one another that they are starting to slow customer traffic and hurt each other’s business, according to Fortune.

Starbucks added 1,300 U.S. stores since 2011 and now has about 8,000 nationwide, Fortune found.

BMO Capital Markets analyst Andrew Strelzik determined that 75 percent of Starbucks stores in California have a second Starbucks store within a one-mile radius, CNBC reports.

“Cannibalization likely has increased,” Strelzik wrote. “Strong new store performance appears to be coming – at least in part – at the expense of existing store traffic.”

Strelzik downgraded Starbucks’ stock outlook, prompting it to drop about 3.3 percent since Monday. The stock was trading at around $53.86 as of Wednesday morning.

Comments

Leave a Reply

Please log in using one of these methods to post your comment:

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

More From CBS Los Angeles

facebook.com/CBSLA
Plan Your Trip
Follow Us On Twitter

Watch & Listen LIVE