There's a new rumor that Starbucks could eventually beat McDonald's in becoming the world's most valuable restaurant. This bold prediction comes from a very knowledgeable source -- Nomura analyst Mark Kalinowski.
Fortune reports that in a note to investors, Kalinowski chose Starbucks as his top restaurant stock pick for 2017. "We believe that it is only a matter of time before Starbucks overtakes McDonald’s as the largest market cap restaurant stock, although likely not in 2017," Kalinowski wrote. Currently, Starbucks is worth about $79 billion, while McDonald's is worth about $98.47 billion. By those numbers, it looks like Starbucks has a bit of climbing to do. But Kalinowski says that in four to five years, Starbucks will have been able to open 50,000 locations, which would be more than any other chain.
At that rate, Starbucks is expected to grow to 50,000 locations before anyone else is able to do the same. The reason behind this argument is that Starbucks' brand is centered on drinks, which is a growing market, rather than food, which is what competitors are focusing on.
The prediction is that Starbucks will be able to increase same-store sales by more than 5 percent, in addition to the growth of restaurant count mentioned above, according to Bloomberg Markets. "It is only a matter of time before Starbucks overtakes McDonald's as the largest market cap restaurant stock…" Kalinowski says. This analyst is well known for his McDonald's franchisee surveys.
These predictions are bold mainly because Starbucks' stock had a bad 2016, in which its stock fell 7.5%, most likely due to the changing of CEOs that took place. We all know that the market doesn't like unpredictability. NPD Group predicts that Starbucks will see "little to no traffic growth" in 2017, which means Kalinowski's prediction puts a lot of pressure on 2018, 2019, 2020 and 2021.
Although Starbucks' goal is a bit lower than the hefty 50,000 restaurants Kalinowski is predicting (its goal is to open 37,000), Kalinowski seems pretty confident in his prediction. In that case, what are we waiting for? Let's go and get some of that stock!