The Rising Influence of Rising Affluence

[Titan V]

Coffee wars! Wall Street runs on Dunkin', not Starbucks
http://money.cnn.com/2017/03/23/investing/dunkin-brands-starbucks-coffee-trump/index.html

Shares of Dunkin' parent company Dunkin' Brands (DNKN) (the company also owns ice cream shop Baskin-Robbins) are up 10% this year and 25% over the past 12 months, largely due to earnings and sales that topped Wall Street's forecasts.

The stock is even trading at an all-time high. Talk about a caffeine jolt.

Starbucks, on the other hand, is flat this year and has lagged the performance of Dunkin' over the past year.

One reason? Starbucks is having some growing pains with its mobile app, which allows customers to place and pay for orders in advance and skip waiting on line at the checkout counter.

Starbucks (SBUX) incoming CEO Kevin Johnson, who will succeed founder Howard Schultz next month, said in the company's earnings call in January that the success of the app has had some unintended consequences.

So many people are ordering in advance that it has created a rush of orders for baristas to handle. So long lines to order have been replaced by long lines to actually get their coffee.

It's happening at peak hours -- and scaring off some customers who are walking in the door without placing their orders in advance.

Johnson said during its annual shareholder meeting Wednesday that Starbucks has taken steps to address the issue.

At its busiest stores, Starbucks has added two employees to deal just with mobile ordering. Johnson said this is helping to ease some of the congestion.

Of course, too many orders is a good problem to have. But Starbucks also has to deal with the fact that Dunkin' Donuts -- as well as other rivals like Peet's, Caribou, Tim Hortons and even McDonald's (MCD) are all trying to become the new king of coffee.

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