Starbucks, which had 14,163 U.S. locations at the end of 2017, has struggled to lure the number of customers needed to satisfy investors' growth expectations, according to Reuters.
Starbucks had 25 percent more stores at the end of 2017 than five years ago, and the company now has 127 more locations than McDonald's. Starbucks executives claim the company is not losing market share or cannibalizing its own sales, but analysts disagree.
Sara Senatore, a Bernstein analyst, said "excess unit growth, at a time when Starbucks is reaching a more mature stage of growth, is the root cause" of the company's challenges. The rapid increase in the number of Starbucks locations combined with more competition has made it difficult for the company to re-accelerate growth, said Jason West, a Credit Suisse analyst.
Starbucks may also be losing less affluent customers to rivals such as Dunkin' Donuts and McDonald's. Stephen Anderson, a Maxim Group analyst who tracks coffee prices in 10 markets in the Northeast, said Dunkin' Donuts has raised prices by about 1 percent per year, while Starbucks has raised prices by roughly 3.5 percent each year. McDonald's sells $1 coffee and $2 small espresso drinks and has kept prices mostly flat for the last few years, according to Reuters.
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