re: SBUX,
They sell an addictive drug
well, anybody can sell coffee. i think what SBUX really sells is a consistent, high-quality service experience (kind of like McDonald's except aimed at a yuppy demographic). for one thing, if you drink cappuccino, you will notice that SBUX is pretty darn consistent in their product. whereas a lot of mom and pop places are inconsistent. that is, when you go to SBUX and order a cappuccino, what you get is a cappuccino, not a latte. the milk is freshly frothed and HOT. the espresso is freshly expressed (i think they are supposed to use it within 10 seconds). so, it's like, they have standards.
making a decent cappuccino is not rocket science. with a little practice, you can make a good one with a $500 machine (this is not very expensive if you compare it to a serious Starbucks habit). but there are a few basic concepts, such as temperature, amount of milk, and concentration of the espresso, that are important.
i have been to so many mom and pop places that screw up these simple processes (even though they have a $5000 cappuccino machine) that i avoid these places like the plague. at Starbucks, at least i know that i will get a satisfactory product for my 3 dollars. and i can get that product all over the country and indeed in many other countries.
so Starbucks has done a wonderful job of providing a consistent product, whereas many of its smaller competitors provide inconsistent product. (there are certainly a few good mom and pop places, and they are apparently doing well according to an article in today's WSJ), but i think they are the exception rather than the rule.
i think SBUX rocks! although if i examined their financials very closely, i believe i would consider their stock overpriced and would probably rather short it than own it. maybe get them to pay me back for all those fivers they've separated from me over the years -g-. |
