Starbucks Corp. sources coffee beans globally but is experiencing rising prices due to 50% tariffs on Brazilian coffee, which constitutes 38% of world supply. Barron's estimates a potential 3.5% increase in cost of goods sold, creating a 0.6% headwind on earnings. CEO Brian Niccol aims to transform stores into gathering places, focusing on customer service and menu simplification. However, there are ongoing service challenges such as cleanliness and inventory shortages. Starbucks competes with major brands and local coffee shops, alongside new entrant Luckin Coffee.
Starbucks sources coffee globally but faces rising prices due to 50% tariffs on Brazilian coffee beans, which account for 38% of the world’s coffee supply.
Barron's estimates that higher coffee prices could add 3.5% to Starbucks' cost of goods sold, resulting in a potential 0.6% headwind on earnings.
Starbucks CEO Brian Niccol aims to revive the stores as community hubs, emphasizing customer service and trimming the menu, despite ongoing service challenges.
Starbucks competes with several companies, including Dunkin' Donuts and McDonald's, as well as local coffee shops and new entrants like Luckin Coffee.
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