At Starbucks, Third Place Is No Longer Gold

“New Starbucks opens in the restroom of the current Starbucks” was a brilliantly satirical headline in 1998 when the coffee chain was already seemingly popular. As of a month ago, the day Howard Schultz returned as CEO for the third time, it had nearly 10 times as many stores as in North America.

When Mr. Schultz revealed that number of stores along with the chain’s disappointing second-quarter financial results, the chain’s shares were down more than 40% from last summer’s all-time high. Cost and wage pressures coupled with the hotly contested consolidation dynamics at home and the recent sales collapse in China, the chain’s second-biggest market, all weighed on sentiment. . But this past Wednesday, the first trading session after the release, the stock rallied nearly 10% in its best day since a strong March 2020 rally following the Covid-19 market panic. That comes despite the fact that the company has suspended financial guidance for this year.