SEATTLE McDonald’s. —Starbucks Corp. chairman and chief executive Howard Schultz has historically disliked any comparisons between his coffeehouse chain and
But if the coffee giant can reverse course after its first-ever quarterly loss as a public company and fix its negative same-store sales and traffic trends, Starbucks may welcome talk of similarities to the burger giant. —Starbucks Corp. chairman and chief executive Howard Schultz has historically disliked any comparisons between his coffeehouse chain and
(To view charts featured in this week's financial pages, click here.) —Starbucks Corp. chairman and chief executive Howard Schultz has historically disliked any comparisons between his coffeehouse chain and
After a multiyear turnaround that many cite as one the most successful in foodservice history, McDonald’s now is running on all cylinders. —Starbucks Corp. chairman and chief executive Howard Schultz has historically disliked any comparisons between his coffeehouse chain and
Starbucks’ road ahead will be difficult. And, given the current economic malaise, a corporate comeback will be more complicated than what McDonald’s pulled off in the past, according to analysts. —Starbucks Corp. chairman and chief executive Howard Schultz has historically disliked any comparisons between his coffeehouse chain and
“A Starbucks turnaround is less in their control,” said Joe Buckley, a restaurant analyst at Banc of America Securities LLC. “They will need the economy to be better.” —Starbucks Corp. chairman and chief executive Howard Schultz has historically disliked any comparisons between his coffeehouse chain and
That’s because Starbucks so successfully expanded its customer base beyond upper-income consumers, Buckley said. —Starbucks Corp. chairman and chief executive Howard Schultz has historically disliked any comparisons between his coffeehouse chain and
Because Starbucks’ patrons now include people of varying economic means, the chain is more susceptible to economic trends, especially the drop in consumer spending that’s hurting many restaurant chains. Starbucks’ vulnerability is reflected in its slowed sales. Although the company does not reveal same-store data, analysts estimate that the chain’s latest-quarter same-store sales were down as much as 7 percent. —Starbucks Corp. chairman and chief executive Howard Schultz has historically disliked any comparisons between his coffeehouse chain and
Another hurdle Starbucks is facing in its turnaround efforts is heightened competition. When McDonald’s was orchestrating its upswing, quick-service competitors like Burger King, Hardee’s and the chains under Yum! Brands Inc. also were struggling and closing units. Today, almost every quick-service chain is competing for Starbucks’ coffee and breakfast customers. McDonald’s said it expects its smoothies, energy drinks and specialty coffees—which are all slated to be available systemwide next year—to add sales of more than $1 billion in the United States. —Starbucks Corp. chairman and chief executive Howard Schultz has historically disliked any comparisons between his coffeehouse chain and
John Ivankoe, an analyst at JP Morgan, said that if just 10 percent of McDonald’s incremental traffic comes from Starbucks customers, the detrimental effect on Starbucks’ same-store sales could be as much as 2 percentage points. —Starbucks Corp. chairman and chief executive Howard Schultz has historically disliked any comparisons between his coffeehouse chain and
He added that Starbucks was “focusing on creating attractive price points … addressing a more cost-conscious consumer.” —Starbucks Corp. chairman and chief executive Howard Schultz has historically disliked any comparisons between his coffeehouse chain and
No one is certain when Starbucks’ efforts could gain traction. Many say the speed with which the company moves is impressive for a chain of more than 16,548 locations worldwide, including 11,570 in the United States. Others say speed could be detrimental if mistakes are made. —Starbucks Corp. chairman and chief executive Howard Schultz has historically disliked any comparisons between his coffeehouse chain and
“We are concerned that there could be execution challenges as Starbucks ‘fast tracks’ its pipeline,” said Steven Kron, an analyst at Goldman Sachs. “If not done well, it could hinder the brand.” —Starbucks Corp. chairman and chief executive Howard Schultz has historically disliked any comparisons between his coffeehouse chain and
Schultz said during the company’s quarterly conference call last month that Starbucks is playing both offense and defense during this “perfect storm” economy. The company already is closing 600 locations in the United States as well as additional units abroad, and slowing development worldwide. The moves, coupled with the slashing of more than 1,000 corporate positions, are expected to garner savings of between $200 million and $210 million in fiscal 2009. —Starbucks Corp. chairman and chief executive Howard Schultz has historically disliked any comparisons between his coffeehouse chain and
The closures of weaker stores are expected to bump up same-store sales results by at least 1 percentage point, assuming the customers head to another Starbucks location and don’t migrate to competitors, analysts said. —Starbucks Corp. chairman and chief executive Howard Schultz has historically disliked any comparisons between his coffeehouse chain and
To drive sales Starbucks said it would introduce new products like the recently launched Vivanno line of smoothielike drinks and the Sorbetto drinks being tested in Los Angeles. The chain also said it is tweaking the recipes of its breakfast sandwiches so their smell does not overpower the aroma of fresh-ground coffee that Schultz views as part of the Starbucks experience. —Starbucks Corp. chairman and chief executive Howard Schultz has historically disliked any comparisons between his coffeehouse chain and
Despite the new offerings, however, Starbucks said it saw no significant sales lift in the latest quarter. —Starbucks Corp. chairman and chief executive Howard Schultz has historically disliked any comparisons between his coffeehouse chain and
“In some ways we’re moving customers from one beverage to another,” Schultz said. “In a normal environment, we would have seen an uptick in sales and traffic, but we have been unable to move the needle upward because we still have significant headwinds.” —Starbucks Corp. chairman and chief executive Howard Schultz has historically disliked any comparisons between his coffeehouse chain and
Both the slower traffic trends and the costs associated with store closures swung the coffeehouse giant to its first quarterly net loss as a public company. For the third quarter ended June 29, Starbucks reported a net loss of $6.7 million, or 1 cent per share, compared with a profit of $158.3 million, or 21 cents per share, in the same quarter a year ago. Latest-quarter net revenue rose 9 percent to $2.6 billion. —Starbucks Corp. chairman and chief executive Howard Schultz has historically disliked any comparisons between his coffeehouse chain and
Company officials revised full-year, per-share-earnings projections to the “mid-70-cent range,” from previous projections of between 90 cents and $1 per share. The estimates do not include the aggregate 19 cents per share charged through the third quarter for the company’s restructuring efforts. —Starbucks Corp. chairman and chief executive Howard Schultz has historically disliked any comparisons between his coffeehouse chain and
Net revenue growth for the year is expected to be about 11 percent, compared with earlier projections of an increase between 13 percent and 14 percent. —Starbucks Corp. chairman and chief executive Howard Schultz has historically disliked any comparisons between his coffeehouse chain and
New domestic openings planned for the rest of the year were lowered by about 120 locations to a total of 900 stores. Last year Starbucks opened 1,800 U.S. locations. —Starbucks Corp. chairman and chief executive Howard Schultz has historically disliked any comparisons between his coffeehouse chain and
International development was also cut, and the chain will open 825 locations instead of the planned 975 units. The reductions were sparked by concerns that parts of the United Kingdom and Western Europe were showing signs of economic distress similar to that in the United States. —Starbucks Corp. chairman and chief executive Howard Schultz has historically disliked any comparisons between his coffeehouse chain and
Starbucks officials said they anticipate that fiscal 2009, which begins in October, will be another year of transition. Per-share earnings are expected to total between 90 cents and $1, officials said. —Starbucks Corp. chairman and chief executive Howard Schultz has historically disliked any comparisons between his coffeehouse chain and
Starbucks also said it planned to open fewer stores than it closes in fiscal 2009. In the United States, the number of corporate locations is expected to drop by 125 locations, and licensed locations will increase by 165 units. About 900 international stores are scheduled to open in fiscal 2009, a decline from earlier projections of 1,050 new international units. About two-thirds of the planned international openings will be licensed restaurants. —Starbucks Corp. chairman and chief executive Howard Schultz has historically disliked any comparisons between his coffeehouse chain and
