The holiday season is stirring up the competitive juices of several big names in the restaurant industry, as companies such as Starbucks
Each of these companies has stepped into the others' turf recently, with Starbucks venturing into smoothies, Jamba into coffee, and McDonald's into both. Now, each wants to flex its holiday muscle, whether by bumping up its coffee game or guarding its holiday-smoothie niche. Let's look at the specifics, and see what all this means to investors.
For starters, Starbucks is doing a buy-one-get-one promotion on its holiday drinks this weekend, and you can bet stores will have samples of the new Via Christmas blend on hand. Meanwhile, coffee newcomer McDonald's is adding a Caramel Mocha to its McCafe line, just in time for the holidays. It's backed by a nationwide scavenger hunt promotion, with a year's worth of free McCafe as the prize. On the colder side of the drink spectrum, Jamba recently re-released its own seasonal drink, the Pumpkin Smash smoothie.
Odd man out Peet's Coffee
Peet's days sales in inventory, a measure which looks at how long it takes a company to sell something, is up year over year in the recent quarter. This measure suggests that demand is slowing at Peet's as it takes longer to sell its products. Rising inventory is especially bad in the food business, where items on the proverbial shelf can spoil if held too long. Peet's could use a holiday shot in the arm to speed up sales, but so far, it appears to have nary a promotion nor a differentiating product.
While Peet's competitors battle it out for the chance to serve thirsty holiday shoppers, Peet's seems to think it can safely sit on its laurels. In the competitive restaurant business, companies that stay idle are practically giving away market share. Don't expect Peet's to get more than a lump of coal in return.
