These “Bros” Are Coming for Starbucks VIEW IN BROWSER BY ANDY SWAN, FOUNDER, LIKEFOLIO Starbucks (SBUX) is falling out of step with consumers, and the data is loud. 
Digital demand for the coffee giant is plummeting -29% year over year – a metric that proved prophetic ahead of the company’s earnings last week. Starbucks reported its sixth straight same-store sales decline. Third-quarter comps fell 2% globally, worse than expected. U.S. traffic dropped again, even as prices rose. Adjusted earnings per share missed by a wide margin. SBUX closed the week deep in the red. And Earnings Season Pass members who took our bearish trade walked away with a +96.70% profit in three days. 
Source: TradingView The underlying theme plaguing the once-great caffeine machine is a breakdown in consumer loyalty, driven by a brand with diminishing brand proposition. Busy college students like my daughter are feeling this shift firsthand: “I used to rely on Starbucks mobile order pickup to save time between practices and class. The mobile-only store on my college campus was one of the most popular spots on campus. It was fast, consistent, and had something for everyone, whether it was cold brew, refreshers, or matcha. Now, Starbucks is closing nearly 90 of those stores, saying they lacked “warmth.” But for my generation, speed and flexibility is the experience. Removing that makes the brand feel slower, older, and more out of touch.” And she’s not the only one. LikeFolio’s social media analysis shows consumer sentiment at large slipping as complaints about high prices, staff shortages, and boycotts stack up… “Starbucks coffee is too expensive. I gave it up.” “Somebody tell Brian Niccol the mobile ordering thing they got at @Starbucks has completely ruined the in-store customer experience. Bc I love ordering with no one in line then waiting 15 min for my drink while 10 jabronis not there get theirs made first.” “I have given up on Starbucks. Too long a line, too expensive. Gas station coffee-at least you don’t have to wait 10 minutes and pay $5 for it.” Starbucks is trying to pivot. It brought on corporate fixer Brian Niccol as CEO. It’s pausing new store development and reworking existing cafes with better seating and real mugs. It’s investing $500 million in labor and store upgrades, while cutting 1,100 corporate roles. | Recommended Link | | | | As you may know, the U.S Treasury has already collected a record $15 billion due to President Trump’s tariffs. What you probably don’t know, however, is that thanks to Title 15 of the U.S. Code, you now have a chance to pocket your own tariff-driven cash payouts – as much as $100 to $1,000 a pop, deposited directly to your account. The great part is you can collect these payouts right off your smart phone using my #1 income strategy. Go here now to see exactly how to do it… |  | | And some of these efforts are working: Menu simplification made room for high-performing items like a new cortado and sugar-free matcha, which boosted matcha sales by nearly 40%. But overly complicated drinks like “Iced Horchata Oatmilk Espresso”? That’s not helping. The Starbucks brand feels bloated, complicated, and overly engineered. And Main Street at large agrees. Leadership is working to fix operations, but at the end of the day, it’s still missing the cultural mark. But where Starbucks is losing ground, the competition is gaining… 
For Starbucks, the chart above reveals a huge problem. But for you, it reveals an opportunity to profit… The Caffeine Fix Your Portfolio Needs Up-and-coming coffee chain Dutch Bros (BROS) is hitting all the markets that once made Starbucks successful: fast, drive-thru drinks that are easy to order and tailored to local demand. Compared to Starbucks’s more than 40,000 stores worldwide, Dutch Bros footprint looks downright tiny, with just ~1,000 locations spanning Oregon to Florida. But bigger is not always better. And BROS is growing fast. Take a look at the digital demand growth chart below… Web visits are trending one way: Up and to the right. 
Dutch Bros has quickly flown to the top of LikeFolio’s consumer charts by focusing on smaller, 950-square-foot drive-thru buildings that keep service moving quickly – and costs down – while offering a robust loyalty program keeps them coming back for more. In contrast to Starbucks’ convoluted drink offerings, Dutch Bros offers a more straightforward menu, featuring coffee classics, blended freezes, chai lattes, and the like. But it also stays in step with rising consumer trends with its own line of Rebel energy drinks to quench our insatiable thirst for caffeine, and protein coffees to feed increasingly protein-heavy diets. Consumers who know it, love it. That loyalty program I mentioned – “Dutch Rewards” – accounts for nearly 72% of company transactions, driving 28% year over year revenue growth in the most recent quarter. BROS is winning where SBUX is slipping. And shareholders, including our MegaTrends subscribers who got in on BROS last June, are reaping the profits. Our BROS position has gained +72% in just over a year. The stock flew more than 20% higher this week on an outstanding earnings report MegaTrends members saw coming. (You can join us today and get in on the next winner, too.) Meanwhile, SBUX shares continue to drop in value, down nearly 20% over the last six months. To be clear: The bullish case for Starbucks is Brian Niccol. He’s the king of turnarounds. He’s made bold decisions like cutting corporate bloat, ditching underperforming formats, and pushing toward store designs that deliver better returns. Menu specialization is a task Niccol plans to tackle, and we do see hints of promising product innovation, such as its new Protein Cold Foam offering. (Although BROS has been offering protein coffee since January of last year.) 
Source: dutchbros.com If Niccol’s changes can translate into consumer traction, it could deliver the Starbucks turnaround Wall Street’s hoping for – and LikeFolio followers will be the first to know. We’re watching for it – it just hasn’t happened yet. For now, Starbucks is doing damage control. Dutch Bros is doing demand capture. And until the consumer shows up for SBUX again, our bet stays with BROS. Until next time, 
Andy Swan
Founder, LikeFolio | 
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