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Starbucks Leaves a Bitter Taste

By Tim Beyers - Updated Apr 5, 2017 at 7:54PM

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The lack of free Wi-Fi drives customers away.

The Colorado town where I live hosts 14 free commercial Wi-Fi hot spots, according to the Wi-Fi FreeSpot Directory. Two of those are coffeehouses. The one I frequent -- Serenity Coffee -- isn't listed, but it also has free Wi-Fi access, good coffee, and a comfortable space in which to work.

I mention this because my town also hosts five Starbucks (NASDAQ:SBUX) stores with not-so-free Wi-Fi access supplied by partner AT&T (NYSE:T). "The only requirement is that you need to have a reloadable Starbucks card to get two hours of free Wi-Fi service a day," wrote Foolish colleague Tim Otte in February.

Seems fair. But is this really worth it? Unless you absolutely love Starbucks coffee, you're better off going elsewhere to jack in. Even Tim says so: "I've just started going to Panera Bread (NASDAQ:PNRA) simply because they offer free Wi-Fi access that's easy to connect to."

I've heard this from far too many others, including a Starbucks barista. Wi-Fi, in effect, has become a reason for on-the-go caffeine junkies to try alternatives. Our 125,000-strong Motley Fool CAPS community is concerned about Starbucks, giving it just two stars:

Metric

Starbucks

CAPS stars (5 max)

**

Total ratings

7,300

Bullish ratings

5,763

Percent bulls

78.9%

Bearish ratings

1,537

Percent bears

21.1%

Bullish pitches

1,255

Bearish pitches

405

Note: data current as of Dec. 22, 2008

As CAPS member LoneClapper wrote last week: "Strong competition in specialty coffee will cut margins." Exactly.

The store experience is what sells the coffee, Starbucks. Wi-Fi is key to the experience. Unlock it, or risk losing ground to burgeoning beaneries such as Peet's Coffee & Tea (NASDAQ:PEET).

But that's my take. I'm more interested in what you think. Would you buy Starbucks at today's prices? Would you short it? Let us know by signing up for CAPS today. It's 100% free to participate.

Warm yourself with a cup of related Foolishness:

Both our Inside Value and Stock Advisor services have recommended Starbucks stock to subscribers. Panera is a Motley Fool Hidden Gems Pay Dirt recommendation. Try any of these Foolish services free for 30 days. There's no obligation to subscribe.

Fool contributor Tim Beyers is a member of the Rule Breakers team, but didn't have positions in any of the stocks mentioned in this article at the time of publication. Connect with Tim on Twitter as @milehighfool. The Motley Fool owns shares of Starbucks and is also on Twitter as @TheMotleyFool. The Fool's disclosure policy is curled up near a warm fire today.

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Stocks Mentioned

Starbucks Corporation Stock Quote
Starbucks Corporation
SBUX
$88.31 (1.19%) $1.04
AT&T Inc. Stock Quote
AT&T Inc.
T
$18.27 (1.27%) $0.23
Panera Bread Company Stock Quote
Panera Bread Company
PNRA

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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