Tuesday, March 07, 2006

Starbucks' Questionable Breakfast

For the people who spend more on coffee than this aspiring bureaucrat spends on dinner, some Starbucks locations are now offering breakfast sandwiches:

Now, as McDonald's Corp. and Burger King Corp. offer premium brew, and Dunkin' Donuts sells caramel swirl lattes, the Seattle-based coffee behemoth is more than doubling the number of stores that sell hot breakfast sandwiches this year.

Offering such trimmings as peppered bacon and Black Forest ham, Starbucks added the English muffin sandwiches to stores in Washington, D.C., last year, and in Portland, Ore., last month. That will expand to San Francisco in early April, and Chicago later this year.


The sandwiches sell for $2.95, about the price of a 12 oz. "tall" mocha, which costs $2.70-$3.40 depending on the region. The suggested retail price for a small latte at Dunkin' Donuts is $1.99; it's $2.74 for breakfast sandwiches with egg, cheese and ham, bacon or sausage. At McDonald's, the suggested retail price for a small cup of premium roast is 99 cents; for an Egg McMuffin it's $1.99.

This note was particularly interesting:
Starbucks has not disclosed exactly how its growing sandwich business is affecting its bottom line -- only that on average, it boosts same-store revenues by about $30,000 a year, or roughly 3 percent.
They are talking about a new product, but the numbers they have released sound kind of funny. Unless they're just popping them in the microwave, the wages, space, and equipment required to provide these $3 breakfast sandwiches should cut pretty far into that "boost" in revenues.

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April said...

I would love to know the bottom line numbers they seem hesitant to release.

Nick said...

It might be a little early for them to be reaching many conclusions, but the selective information they released is interesting. It sounds like they are trying too hard to stay positive, maybe they're just worried about stock prices :)