Tue 25 Jul 2006
I just noticed that Caribou Coffee (CBOU) is a public company.? It’s actually tiny compared to the behemout Starbucks (SBUX)…? The market cap for CBOU is under $120m right now (compared to $25 billion for SBUX), and it’s foundering at the lowest price since its IPO 10 months ago.? The fundamentals aren’t strong enough to get me to bite, and the chart pattern does nothing to bolster confidence…? but I’ll drink their coffee any day.? There’s a difference between a good product and a good investment (see TiVo or NetFlix for similar products I recommend but would find difficult to invest in — ouch, Netflix is down 20% today).
July 25th, 2006 at 10:49 am
I agree. The \’Bou has great coffee for a chain. This reminds me of that typical story that always gets me down: the great idea and superior product that just can\’t seem to make a dime for one reason or another. Think Betamax or, more recently, the many superior iPod-killers available from COWON that no one knows about. Or the mom-and-pop coffee shops where everyone gets their own fresh grind in a French press right up until the day they shut down.
I was having this discussion just the other day about the difference between good quality ideas and good economic ideas. They don\’t seem to be the same thing sometimes, with often frustrating outcomes for the niche consumer. I remember Crazy Juice on Franklin St. that used to make the most amazing smoothies unlike any of the other bland shops you come across today. But who\’s still around? Not CJ.
Of course, there are examples in the other direction too. And who\’s to say that just because I think something is worthwhile that the average consumer does. My tastes could be fringe. But there are some very interesting questions to be raised about consumer quality vs. consumer success and what drives each.
July 25th, 2006 at 11:38 am
Speaking of small coffee, did I mention that I could just about go on a rampage over Starbucks insistence on calling all of their drink sizes some pretentious variation of the word “large”? When I do find myself in a Starbucks out of desperation, I always get sick pleasure out of ordering a “small” coffee just so I can hear the person on the other side of the counter say, “Tall?”. “No, small.” “You mean Tall?” “No, I mean small.” It’s like they can’t perform a simple mapping of abstract concepts in their head. Surely they know what you mean when you say small. And “Venti”? Don’t get me started. But there is perhaps a reason for the seeming void in logical thought. Rumor has it that a cup size smaller than a “Tall” (which is already damn small) does exist under the counter or in the back room but must be specially requested (read coerced). Be prepared however to perform the ritual outlined above before striking black gold.