Why I Bought Starbucks
I really like investing, but to try to shield myself from the risk of being labeled a financial advisor, I generally don’t talk about it online. However, I decided to break that rule and share my latest investment choice, which, as you’ve probably guessed from the title of this post, is Starbucks.
The way I see it, Starbucks might just be the most common luxury brand in the world: people are paying four to five dollars for a product that’s mostly cost of labor to produce. I tend align with Mr. Money Moustache’s view of Starbucks as a business: it’s an occasional treat, not a daily necessity. Tons of people I know don’t see it that way at all. A day without Starbucks is a day that never really started. The unit economics of it seem inherently favorable as well. When you see what cost of labor per product translates to, averaged against the number of those you can produce in an hour, you’ve gotta think that the price per cup is well under 50 cents per unit. Margin’s only going to go up as you get into specialty junk like Pumpkin Spice Lattes at whatever else. It’s also a brand that’s managed to maintain dominance in its space, even as a retail option outside it’s traditional timeslot. (Translation: every time I try to grab a 3 PM capuccino at the Starbucks across from my office, I can’t, as there’s a line out the door and around the corner.)
On top of all this, I think the buy is a really nice alignment with my values and my finances. They’re one of the most vocal pro-gay companies in the world, and are very up front about their stance of being very pro-diversity and pro-inclusiveness. They’re probably the only company I can think of that is mostly made up of hourly employees, and yet offers the following to all of said hourly employees working over 20 hours a week:
- Comprehensive healthcare to the employee, their partner, and their family,
- 401(k) with partial employer match,
- Adoption assistance,
- Discounted employee stock purchase plan,
- Full tuition reimbursement for courses taken online from Arizona State University.
Keep in mind, hourly employees are the same resource that most other companies tend to treat as interchangeable cogs. If you can do all of these things for them, and issue quarterly dividends for five plus years, I want to own your business.
Now go grab yourself a mocha and help my share price.