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Starbucks, Diabetes and a Deutsche Downgrade


There’s something about Starbucks SBUX that people love. Yes, Captain Obvious, the coffee. But it’s more than that. They ask your name, you get to hit on the barista a little bit, “No sugar for me darling, I’m sweet enough.” And, you can give them an awesome fake name they’ll call out loud like Thor, Mufasa, or my personal favorite, Mr. Snugglesworth.

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Somebody messed up the rotation at a Starbucks in Florida. The barista, instead of being nice, flirty and accommodating like they are with me, got a little nasty on a customer. On the side of somebody’s Grande White Mocha they wrote “Diabetes here I come.” Now, Diabetes runs in my family so I’ve seen the disease first hand. It’s not funny. You wouldn’t put “Cancer around the corner” or “Congestive Heart Failure any day” on somebody’s coffee. So why do you think it’s okay to talk garbage about the sugar?

And we are talking about Florida here. Starbucks is probably the last place I’d worry about diabetes. I got a sweet tea from a Krystal’s down there and my straw stood straight up like a milkshake. Their faucets have cold water, hot water, and BBQ sauce. I once ordered biscuits and gravy and it came in a bowl.

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I don’t know what’s more surprising. The barista having the gall to put that on the cup, or the fact they actually spelled diabetes correctly. That’s what happens when people get a little too high and mighty. Feeling fancy huh? Got a job at the Starbucks and suddenly you’re too good for jean shorts, a dirty tank top and flip flops. Starbucks obviously apologized for the incident in a statement.

“We strive to provide an inclusive and positive experience for our customers and we’re disappointed to learn of this incident. We are working directly with the customer to apologize for his experience and with our partners (employees) to ensure this does not happen again.”

Unrelated to the event, Deutsche Bank DB downgraded Starbucks from Buy to Hold, citing lofty near-term expectations and premium valuation. Still, we’ve got the stock at a Zacks Rank #2 (Buy) heading into earnings after the market close next Thursday. Starbucks has a pretty good earnings history of coming within a penny of estimates. Last quarter was a penny surprise with EPS coming in at 46 cents versus expectations for 45 cents. This quarter analysts are looking for 39 cents.

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