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Starbucks Partners United Way to Expand in Underserved Areas

Zacks Equity Research

As part of its expanded Community Store Program initiative, Starbucks Corporation SBUX announced that it plans to open 100 community stores in low income areas across the United States by 2025. The company partnered with United Way to develop programming for each store, such as youth job training classes or mentorship groups.

Notably, the community program initiative was launched in 2015 and since then Starbucks has opened 14 stores across the country with the first one in Ferguson, MO. It will open its 15th store in Prince George’s County, MD this spring.

The 14 Community Stores have helped the company empower partners and customers to create meaningful impact locally and reach out to more than 8,000 neighborhoods across the country.

The Seattle-based coffee chain, while opening or remodelling its 85 stores, will take into consideration some factors like high youth unemployment, low median household income and population stability. Moreover, the company will prioritize developing stores in economically distressed communities or Opportunity Zones. It anticipates to open stores in Prince George’s County, MD; Anacostia, D.C.; and Los Angeles, CA, among others.

Meanwhile, per estimates, the Community Stores have created more than 300 local jobs and generated more than $59.7 million in indirect economic development. The new stores will attract local workers, diverse contractors and will have dedicated community event spaces.

These apart, management focuses on increasing its global market share by opening stores in new and existing markets, remodeling existing stores, deploying technology, controlling costs as well as undertaking product innovation and brand building. In fiscal 2019, Starbucks added 1,900 net new stores. In 2018 and 2017, the company had added 2,300 and 2,250 net new locations, respectively.

For fiscal 2020, Starbucks plans to add 2,000 net new stores (600 net new stores in Americas and 1,400 net new stores internationally). New store productivity and Return on Investment (ROI) in the United States and China are high. By fiscal 2021, the company intends to open approximately 12,000 stores globally, taking the total store count to an estimated 37,000.

Courtesy of these efforts, the stock has outperformed the industry in the past year. The company’s shares have rallied 44.7% compared with the industry’s growth of 21.9% in the same time frame.

 

Zacks Rank & Stocks to Consider

Starbucks currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks from the same space include Chuy's Holdings, Inc. CHUY, Denny's Corporation DENN and Noodles & Company NDLS, each sporting a Zacks Rank #1 (Strong Buy).  You can see the complete list of today’s Zacks #1 Rank stocks here.

Chuy’s, Denny’s and Noodles have impressive long-term earnings growth rate of 17.5%, 9% and 10%, respectively.

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Click to get this free report Denny's Corporation (DENN) : Free Stock Analysis Report Chuy's Holdings, Inc. (CHUY) : Free Stock Analysis Report Noodles & Company (NDLS) : Free Stock Analysis Report Starbucks Corporation (SBUX) : Free Stock Analysis Report To read this article on Zacks.com click here.