Starbucks: Brewing Coffee Dominance?

TLDR;

When it was cheap to get loans (3.6% Interest), company borrowed a lot of money for growth to open up more stores across globe, which was great a move.
Global avg ticket size : Starbucks($7.85), Dunkin'($4.22), McDonald’s($5.20) and Luckin Coffee($2.17)
High interest environment is restricting consumers with discretionary spends.
Diversify more stores outside US.
60% of morning business is done via app, and often loyal customer add item to cart but do not checkout due long wait time.

The company opened 364 new stores in Q2, leaving a total of 38,951, where 61% (16,600) are in U.S. and 18.21% (7,093) stores in China.
China again led the revenues down by 5% to $1.8 billion, reflecting a 5% unfavorable impact from foreign currency translation.
Average ticket size fell by 4%.
Chinese store foot fall dropped by 8% & avg ticket size fell by 4% as rivals put more efforts through promotions and aggressive pricing tactics.
Luckin Coffee : Doubled its outlets (18,590) in china, with ChaPanda operating 8000 stores.
Young Chinese customers naturally gravitate towards Boba tea shops.

Acts as a bank, as through its Starbuck loyalty card program it earns money before providing any services to consumers.
In 2019 users held $1.5Bn as cash in their Starbucks card, this money provides Starbucks a 0% interest loan, which they can invest to earn bond yield or use it for store expansion program.
Lower marketing cost advantage: Starbucks (1.1% of sales), McDonald’s (4% of sales) and Dunkin’s (5% of sales).
Loyalty app users spends average 2-3x more compared to one time consumer, providing volumes of data to increase promotion efficacy across geographies.
Increased transactions via Mobile Order & Pay (MOP) accounting for 31% sales in 2Q24, as of 14% in 2018.
More demand on cold beverages, which accounted for ~70% of sales in 2023, compared to ~47% in 2018.

Due to high interest rate environment consumer spending has tightened due to heightened prices.
Coffee bean prices skyrocketing in last 2-3 quarters.
Legislators in California increased the min wages to $20/hr compared to current avg. min Starbucks wage of $17/hr, this directly affects companies operational costs.
Challenge meeting their peak morning demand.

New store formats (i.e. drive thru, walk up, pick up only etc.) by investing $600mn over 3 years.
Enhance connection with occasional and non-Starbucks rewards customers by giving exclusive offers in app.
Target lower tier cities in China, and capitalise on rising middle class.

Q1 2029 SHARE PRICE = 36.53 * (1.07)^5 * 0.13 * 20 / [1.135 * (0.98)^5] = $130
Using discount rate for Starbucks as 9%.