Drinks On Me

Congratulations to ShanePHallam who correctly picked 3 out of 4 contest questions correctly and won a Starbucks Giftcard!

• The first team to move up was actually the Jags.  Yes the Vikings swapped with the Browns but that deal was done right before the draft started.  It would not have mattered anyway, nobody picked the Browns to move up.

• Mel got a whole whopping 6 picks correct.  And that was with the first 2 (Luck and Griffin) already known to the world.  That equates to a terrible 18% correct and if you take away the two gimmies, it drops to 13% correct.  He did not get ANY of the Richardson, Blackmon, Claiborne, picks correct when most everybody on the internet did.  Sheeesh!

• Richardson was the first to go.

• And the Dolphins did not screw up yet another QB acquisition and somehow managed to pick Tannehill.

Congratulations again to ShanePHallam and thanks to everyone for entering!

Two Impulse Stocks You Know

Starbucks has announced the roll out of their new “Trenta” 32oz cup.  This is in response to customer requests for larger drinks especially with “cooler” drinks and a successful trial run last year which showed management that this type of product and service was in high enough demand from customers.

Over all I think this is a good idea.  What I am not sure about is the fact that they are going to be charging 50 cents more for this drink.  Having co-managed a convenience store once (back when 50 cents actually bought a cup of coffee) the fountain drinks, coffee and “impulse” items near the counter were the biggest profit makers.   The drinks were something that everyone came in to get and usually bought something else to go along with it.  It was also what kept everyone coming back.

Today, this is still true.  In fact many establishments have free refills and “specials” of $1 dollar drinks.

Much of Starbucks competition has this type of model set up now.  In fact my wife and I saw the other day that other convenience store that all drinks, no matter what size were $1.

I get Starbucks decision to offer bigger and better drinks and I understand that they are charging more for them.  I just don’t buy it.

Coinstar recently got hammered by missing analysts targets and supply chain miss queue’s with their $1 Red Box movie rentals.   This model actually fits in with the previously mentioned impulse buying and cheap inexpensive deals consumers and retailers are looking for.  It’s a good model but management did not execute well on the operational and planning side.  As a result, they missed their targets and the stock is now the lowest it has been in over 6 months.

If you believe management, they have already taken steps to remedy this and have learned from their mistakes.  If this is true, then perhaps the current price is a good entry point.   The recent misstep highlights the fact that it does not matter how good a deal an impulse product is, if it is not available for the customer.  Think soda fountain that has run out of drink.  $1 drinks and free refills no longer matter.

As soon as Redbox gets their act together and make available the movies people want on a consistent basis at all locations, their profits should soar.

I’m hesitant to jump in quite yet before I see the stock reaffirm a support level but I am definitely putting on the watch list.