Starbucks: Come for the Coffee, Stay for the Value

It will be repeated here many times that I believe Starbucks to be one of the better values in the market today. While their stock has taken a beating this year, those with a long-term view have snapped up shares that will return at least 30% into the holiday season.

I ignore the hype coming from McDonalds and Dunkin' Donuts about their coffee. Neither one of them claim to have better quality coffee than Starbucks, just coffee at a decent price. So is quality enough to sustain the brand that has made coffee (and the coffeehouse) what it is today?

It's true that Starbucks spends more dollars assuring that their beans are of much higher quality than the next guy and the concept of gourmet vs. regular coffee is not lost on the consumer.

"But, you have 14,000 locations. There are not enough $100,000 plus a year folks out there to sustain the growth you need at all those locations. You'll need to appeal to the "lesser folks" for lack of a better phrase to accomplish what you want. Either that, or you need to admit you need to close another 1,000 plus locations (minimum) to force feed current traffic to existing locations," says Todd Sullivan of Seeking Alpha.

What Sullivan doesn't understand is that it's rather elitist to think that in order to notice the difference between and good roast and swill you have to be making a 6-figure salary. Just because the average person can't identify the "stone-fruit" vs. the "chocolate/anise" tones in a cup of coffee, they still know what they like.

And Starbucks has been giving people what they like and are willing to pay for, for far longer than should be denied. The brand has dug it's way into our hearts and minds and it will not let go.

Without fail, your co-worker will continue to show up 5 minutes late for a meeting, hair wet, wearing mis-matched socks, but still clutching that Venti green and white paper cup.

More food and non-coffee drink offerings are going to be necessary to their bottom line, but I believe the brand alone could carry Starbucks through a profitable 2009 and beyond.