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Starbucks' New Wraps Highlight Its New Growth Driver

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Starbucks Corporation (NASDAQ: SBUX) is known almost globally as a coffee roaster, coffee shop and café. However, the company is seeking to expand its footprint beyond coffee and morning/afternoon snacks, and into the lunch world. The company recently set a target of doubling its food sales over the next five years.

As of Tuesday, Starbucks will start selling two new wraps nationwide: a Thai-Style Peanut Chicken Wrap and an Edamame Hummus Wrap. For now, the meals will be available in roughly 6,000 U.S. stores that have fresh deliveries.

Clarice Turner, Starbucks’ Senior Vice President of Food said: "We thought we would do something that was a little bit different, a little bit less carbs, trying to lean into different dietary needs that people have."

However, the company has not forgotten its roots. According to Reuters, Starbucks will also debut on Tuesday a smoothie line at more than 4,300 U.S. stores as part of a Greek yogurt partnership with Danone SA (ADR) (OTC: DANOY).

“Starbucks doesn't disclose how much of its total sales food now represents, but it's clearly becoming an important growth driver for the company,” Belus Capital's Brian Sozzi wrote on The Street. “Turner noted Starbucks' food sales are growing by 15% annually, also spurred by the introduction of its evening menu several years ago. Starbucks shares have risen 16% this year, easily outpacing the Dow Jones Industrial Average and S&P 500, as investors value the business as a company that can now attract customers all day long.”

Latest Ratings for SBUX

Feb 2018MizuhoDowngradesBuyNeutral
Jan 2018BernsteinDowngradesOutperformMarket Perform
Jan 2018Goldman SachsMaintainsBuyBuy

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