Breakout

Starbucks: Calorie Counting Means Fat Margins

Jeff Macke
Breakout

If you didn't know frappuccinos and bagels could make you fat, you might want to steer clear of Starbucks (SBUX) for a while. As of this week, the planet's largest seller of fancy coffee and lousy sandwiches is posting the calorie counts for every item on its menu in stores throughout the country.

It may not come as a shock to learn that your mocha cookie crumble has nearly 500 calories, but the benefits of putting nutritional information on the menu may surprise you. As it turns out, making you feel a little thick around the middle will probably fatten Starbucks' bottom line.

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Brian Sozzi, head of Belus Capital Advisors, says health conscious consumers have had calorie information available online for years. If they wanted to know or particularly cared about the health risks associated with ladling syrup flavoring into their lattes, Starbucks customers would have opted out ages ago.

For those who have remained willfully ignorant, Starbucks is smart enough to have healthier alternatives readily available. A $6.00 Evolution Fresh pressed juice is lower in calories and higher in margin than most designer coffee confections. "I think they're looking to try and create an awareness of some of their healthier offerings," concludes Sozzi.

Starbucks has a deeper assortment than other coffee shop chains with a huge overlap in goods sold. A sugar-laden coffee and muffin are bad for you no matter where you buy your morning java. The difference is that Starbucks has more relatively healthy alternatives for coffee junkies looking to shed a few pounds.

Shares have been running like a scalded barista, up 20% in 2013, but even so Sozzi thinks Starbucks could hit $70 a share in the next few months.

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