Outspoken Hedgeye Restaurants analyst Howard Penney has been The Bull on Starbucks (SBUX) over the years. But the veteran analyst says the coffee juggernaut has mistakenly moved away from what it does best. He has been recommending investors short the stock and says, “recovery is still a long way off, traffic is declining globally for the brand.”
For starters, Penney maintains that Starbucks is putting too much emphasis on food and complicating its menu. This has put the company in a bad position.
“Complexity kills growth and it’s a theme that I think about for every restaurant company that I like,” Penney explains in the clip above. “As Starbucks has raised the number of items on their menu, sales have slowed. That’s a problem.”
He points specifically to the rise in Starbucks’ breakfast food items and cold coffee items as negatives for the stock.
Watch the above clip for more.
