Starbucks Internet Plans to Make Them Unprofitable
from the the-new-world-business-model dept
Starbucks warned that its internet investments might hurt profits and the stock tanked. I’m not sure what to make of this. In some sense, that’s the correct response. They have a very successful business, with a great brand, and everything’s going great. Why should they mess with the formula? At the same time, however, they’re not an internet brand, and internet companies are supposed to lose money, so this should be seen as a good thing, right? Shouldn’t their stock shoot up like all those other non-Internet companies who added “.com” and reinvented themselves like K-Tel? Until the HTML sarcasm tag is perfected, it is left to the reader’s discretion to determine where I’m being sarcastic.
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Couple of other elements
The journal blamed the drop primarily on rising labor costs that would cost them $5M this quarter (and hurt future revenue if they have to raise prices to cover the increases, I’m sure; if they raise price on my Latte one more damn time…). Journal also said analysts were disappointed that the Frapuccino “franchise”, which was expected to be a $1B brand, was moving too slowly.