Investors have to be asking this question: If $5,000 invested in Starbucks (NASDAQ:SBUX) stock 10 years ago has grown to $52,000 -- making a 10-bagger -- could a similar investment in the specialty coffee industry's No. 2 outfit, Caribou Coffee (NASDAQ:CBOU), achieve a similar return? Let's take a look.

The company
Caribou, founded in 1982, has 337 coffeehouses in 14 states and the District of Columbia. So it's small next to Starbucks, which had 8,700 outlets at the beginning of this year.

Caribou offered 5,358,000 million shares to the public at $14 a share. The $69.7 million in proceeds will be used to pay off the revolving credit facility, for expansion, and for other corporate purposes. The underwriters have a 30-day option to sell an additional 803,700 share overallotment, an option that to me seems unlikely, given the stock's reception so far on Wall Street.

Post-IPO trading
Trading started on a high note Thursday. The stock opened at $15.50 (yes, up $1.50!), but shares cooled off to close at $13. The selling continued Friday, with the stock having fallen to $11.35 at the end of trading.

A hard look
Look at these pictures, and you realize Caribou is not trying to ape Starbucks. The mountain-lodge setting includes a fieldstone fireplace, hardwood floors, lantern lights, and leather chairs and couches.

Sounds good, but I'd venture a guess that operations of this sort don't come too cheap compared with those of a similar ilk, if we're to consider costs of opening and maintenance. Then you have the likes of Starbucks, Dunkin Donuts, McDonald's (NYSE:MCD), and Krispy Kreme (NYSE:KKD) -- to name just a few -- constantly trying to upgrade their coffee offerings. (Starbucks competes most directly and has locations in most every metropolitan area.) So, do customers need another coffeehouse -- lodge setting and all? I'm not sure where that leaves the company if we're to think about economic profitability (returns over and above costs of financing), but I can't feel too good about it.

The company expects same-store sales to increase 6% to 7% this year and between 3% and 7% in the future periods. Next year, the company plans to open between 105 and 115 coffeehouses, up from 80 to 90 this year.

The company lost $0.23 a share across the first 26 weeks of this fiscal year, next to a $0.15 loss for the comparable period. Sales, though, increased 27.4% to $93 million, and earnings before interest, taxes, depreciation, and amortization (EBITDA) increased 30.3% to just above $6 million.

But what really sours this offering, and so many others, is that there are 2.26 million stock options outstanding with an average exercise price of $7.10 a share. With only 19.2 million shares outstanding, that's a potential dilution of 11.7%.

Caribou quotes the National Coffee Association's National Coffee Drinking Trends of 2004 survey that found that approximately 16% of American adults drink specialty coffee on a daily basis and nearly 56% drink gourmet coffee on an occasional basis. While the company sees an excellent growth opportunity and a lifestyle trend, one has to ask whether the cream hasn't already been skimmed off this admittedly great growth market. But I don't think the gourmet coffee market has the potential the company sees. Starbucks recently announced plans to move its growth endeavors overseas -- a sort of tacit admission that the market (from a growth perspective) is not quite so rich as it once was. Where does that leave Caribou?

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Fool contributor W.D. Crotty does not own shares in any of the companies mentioned. Click here to see The Motley Fool's disclosure policy.