Starbucks' Growth Challenge Can Be Seen in Manhattan Coffee Glut

  • More than 240 Starbucks and 161 Dunkin locations in Manhattan
  • BMO Capital Markets cited the proliferation as a concern

A customer exits a a Starbucks coffee shop in New York

Photographer: Victor J. Blue/Bloomberg

It’s only a joke that there’s a Starbucks on every corner.

But the proliferation of the cafes is hindering the company’s growth, according to a recent report from BMO Capital Markets. Andrew Strelzik, an analyst at the bank, downgraded Starbucks Corp. recently and lowered his price target on the stock, arguing that the abundance of locations in the U.S. means that stores are stealing sales from each other and weighing down the company’s results.

Competitor Dunkin’ Donuts is also suffering from a saturated U.S. fast-food market, and recently lowered its new-store target. There are more than 13,000 Starbucks cafes in the U.S., including 240 in Manhattan. Dunkin has 161 locations in the borough, though it has more locations than Starbucks in the whole of New York City.

The tough fast-food competition in the U.S. has pushed Starbucks to increasingly target China as a key growth market.

Shares of the company have dropped 4.4 percent this year through Thursday. The stock fell 7.5 percent in 2016. Dunkin’ Brands Group Inc. shares are roughly flat for 2017.

— With assistance by Matt Turner

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