I'm not sure why anyone would want to order up shares of Caribou. With rival Starbucks struggling to keep Americans interested in $5 lattes, at least the Seattle java king can tap international markets for growth. Whereas Caribou is struggling to simply stay above water at home. Everything about Caribou seems second-rate. If Starbucks is the Coca-Cola
Besides short-term issues, I'm also not convinced that Caribou's niche is large enough to sustain a profitable business over the long run. On the latest earnings call, CEO Rosalyn Mallet summed up the company's "core essence" as "delivering the smoothest, best-tasting gourmet coffee in an inviting, unpretentious atmosphere." This statement is really two (somewhat) subtle digs at Starbucks. First, Starbucks' coffee is too bitter for some palates (a claim that Starbucks itself has acknowledged, with the recent hoopla surrounding the introduction of Pike Place Roast). Second, Starbucks is pretentious.
Caribou is trying to appeal to the Hillary voters, rather than the Obama voters. The beer drinkers, not the wine drinkers. But I have one enormous problem with this strategy: The lattes at Caribou are just as expensive as at Starbucks. Any Lunchpail Joe looking for a cup of joe can go to McDonald's
Caribou is currently developing a long-range plan for the next three years, which makes me wonder what kind of playbook they are using to run the company right now. Management has not articulated a decent near-term or long-term strategy that makes much sense or shows how the company can move into the black.
That makes me nervous as a potential investor, regardless of the price of the stock. With commodity-cost and consumer-spending headwinds adding to the woes of an already troubled company, even the shares' current sub-$3.00 price tag seem about as safe as juggling pots of boiling coffee -- even if that coffee is smooth and unpretentious.
If you're looking for a value play in the coffee world, Starbucks seems like a slightly hobbled thoroughbred that will gallop again. Caribou, on the other hand, is more like, well, a caribou. I'll take a tall of Starbucks, but at Caribou, I'd probably just order a short.
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