Starbucks brings back its reusable cups
The Starbucks coffee chain welcomes its personal reusable cups back. Brian Sozzi of Yahoo Finance shares the details.
MYLES UDLAND: All right, welcome back to Yahoo Finance Live this Tuesday morning. As companies continue to normalize operations, Starbucks, Brian Sozzi, is bringing the reusable cup back after a 15-month hiatus. We talked about it this morning. You can't just take any mug to Starbucks, can you? It has to be a mug that you bought from them. But that I think they'll wash and then give back to you if it's a properly recommended mug, we say.
BRIAN SOZZI: Must be recommended correctly, must be a Starbucks trophy. They used to sell these reusable mugs at the checkout for what I believe was $ 1. Nonetheless, they'll be returning to all U.S.-owned Starbucks stores on June 22nd. And to your point, as you said, Myles, after 15 months of delay.
Let me walk you through the process because it's pretty ridiculous here. It's not the same as it was before the pandemic. A barista will check that your mug is clean and you keep the lid on. This is how you hold the lid. Then they put the cup in a ceramic mug and transport it through the Starbucks restaurant. The company says drinks are made contactless. You will then get your drink back and be ready to go.
Hence, it sounds a lot more time consuming to me just to use this reusable mug. But it comes after we reported last week and also to the Wall Street Journal that Starbucks is seeing shortages of many products. Oat milk certainly, but lots of syrups, of course, and you guessed it, cups when people come back to restaurants.
Ultimately, however, this leads me to take a look at Starbucks stock. I'm following it closely and have looked at it again here. And I'm a little surprised. Look at Starbucks stock, which is only up 3.7% over the year to date. This stock underperforms Restaurant Brands, the owners of Burger King and Tim Horton. This stock is up 9%. McDonald's is up 8.5% year-to-date. Wendy's is up 8% year-to-date. Yum! Brands, KFC, and Taco Bell, that stock is up 8%.
And I came across a good quote. Current research note from the folks at JPMorgan. Restaurant analyst John Ivankoe, he says, citing consumer habits that are now largely broken in the US may take time to rebuild. And I think that basically sums up why Starbucks stocks really lag behind here. There is uncertainty as to whether consumers will return to Starbucks stores to the extent they were before the pandemic. Even when you go back to the office, do you pack your own coffee? Are they still going out for that lunch break, or are they actually just hopping on an Uber or Lyft and heading home? Not clear.
Second, it's also interesting to see how the stock is lagging as COVID variants overseas pull in and more reports of them begin. Starbucks operates about 14, more than 14,000 stores overseas. Any concerns about COVID variants could impact the travel season and longer-term travel prospects, and weigh on Starbucks stock.
Ultimately, here's my hot shot folks. Indeed, the days of spending $ 25 a day in a Starbucks location are probably over. Maybe you spend half of it, or maybe you don't go there at all. This is likely to weigh on Starbucks' longer-term profitability. When is Starbucks recovering internationally? Very important key piece of business for them.
And again, Starbucks, is it immune to labor shortages? I know they always like to play up the fact that they pay their baristas a lot more. Just a higher, well, much higher than the minimum wage compared to other fast food workers. But they are going to need more workers to meet this demand that they see, and they are likely to have to raise wages even further and raise prices. How this will affect customer traffic and the ticket is unclear.
JULIE HYMAN: Brian, you are thinking about the stock as always and the business proposal to return to the reusable cup. I think ecologically. And I think it's great that they do this when it comes to allowing people to bring their cups. I wish more chains would do something like that because since we've all ordered a lot more in the last year, I can safely say that your recycling is filling up with a lot of plastic waste, that is, I mean, probably and will be destined for a landfill not recycled at all. So from that perspective, I think it's good.
BRIAN SOZZI: No, it's good. I just don't think it will catch on to the extent that many of these companies would like it to. I mean, Starbucks has been plugging those reusable cups for over five years. I just don't think it moved the needle for her. But in any case, every cup counts
MYLES UDLAND: I mean, you're right. It was a pre-pandemic trend. Will be picked up in due course. But I don't think the first thing people do after a deadly global pandemic is to jump into the reusable cup game at their local Starbucks where, as you mentioned, they have just started to go back to normal.
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