I believe Caribou does a couple things better than Starbucks. Starbucks is the juggernaut of coffee shops. There are Starbucks across from Starbucks at street corners. Caribou is # 2 right now in the industry second to Starbucks and has slim to no chance of ever being #1. Caribou has more traditional espresso beverages (even though SB tries to use fancy Italian) like calling a macchiato a macchiato not a latte like SBux.

Caribou has been profitable on the bottom line before but not for long. Whether the aggressive new CEO's plans will take market share from Starbucks remains to be seen. Recent same store sales were negative, decreasing 1%. I like what Caribou is doing with the brand getting it out there with General Mills with a snack bar and I believe selling beans(which is one of the most profitable items by the way) in stores finally. Caribou actually may have a sort of competitive niche over Starbucks in that their beans are typically a lighter roast than Starbucks. Lighter coffee's actually have slightly more caffeine(roasting takes some out), more acidity and a different flavor which can be sweeter compared to Starbucks darker roasts. A consumer report in 2004 ranked Caribou's light Colombia #1 among 42 Colombian gourmet coffees. I believe in that same report Dunkin Donut's arabicas had higher ratings than Starbucks.

Opening many more unprofitable Caribou stores is scary for the company maybe even Krispy Cream scary but their other segments seem great like the recently announced Coke bottled cold coffee beverages that are to be sold in stores next year. The same product as Starbucks. I feel Caribou does some things much better than Starbucks, from my experience working at Caribou and seeing and hearing things from Starbucks customers. Caribou aggressively focuses on customer service, including remembering customer names and drinks to get repeat business. Some Caribou customers are looking for a certain atmosphere that is different than a Starbucks or the Starbucks imitators. I think Caribou's Alaskan lodge atmosphere accomplishes this.
Caribou like any smart fast food or quick serve company uses computer screens that display the upcoming orders as opposed to yelling or writing down orders which has more room for errors and is less systematic. Starbucks doesn't use this technology. Many Caribou's have recently upgraded to the espresso machine tech that has been in Starbucks.

I have mixed feelings about Caribou and their ability to become profitable consistently year over year. I think buying shares before a proven growth strategy and business plan with solid cash flows & earnings is purely speculation. If things improve buying below intrinsic value could be lucrative. Buying Starbucks below intrinsic value is an almost sure 2 bagger.

There are some positives for Caribou along with finally getting the brand out in stores and the coming bottled iced coffee drinks with Coke. I like what I'm seeing from Caribou and I hope same store sales stay positive and other segments keep improving and something trickles down to the bottom line consistently then I will maybe take a position if they're at a cheap price.

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full disclosure: I don't own any Caribou Coffee,Starbucks or Coca-Cola shares as of this writing.

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