3 Restaurant Concepts That'll Drive This Growth Stock Higher


Starbucks stock continues to hit new 52-week highs, but can its hot streak continue? Short-term investors may think that, after two decades of fast growth domestically and abroad, there's no room left for the company to expand. After all, the company did miss revenue estimates this past quarter. Nonetheless, you -- the long-term investor -- shouldn't worry. Starbucks continues to innovate and push its way into new ventures and new restaurant concepts. Here are three reasons Starbucks stock will soar.

1. Starbucks: Your neighborhood bar-lounge
You may know that some Starbucks stores serve beer and wine after 4 p.m. More than a year ago, Starbucks expanded its alcoholic beverage menu beyond its Pacific Northwest stores to Atlanta, Chicago, and Southern California. Well, what you may not know of are the delicious food options that accompany the beer and wine menu, which include 10 items from chocolate fondue to "Truffle Macaroni and Cheese."

By offering both, the company gives customers more reason to come to its stores at least twice a day -- once in the morning, once in the evening.

Of course, not all customers will take to the concept. Some may not drink alcoholic beverages, just as some don't drink coffee. Similarly, not everyone will enjoy the food options.

However, if Starbucks expands its evening concept to more regions, you can be sure the company is on the right track. Not only should you see more traffic, but also greater repeat traffic. In turn, sales should rise, and Starbucks stock should follow.

2. Starbucks: Your neighborhood bakery-cafe
Some Starbucks bears worry about the threat Panera Bread poses to Starbucks' domestic growth. And, to some extent, it's real. Panera Bread offers a cafe feel similar to Starbucks, but has much better food options. Once they've snatched Starbucks' hungry customers, Panera gets them to add on a coffee or smoothie. So it's no wonder that Panerahas also seen its stock hit new 52-week highs.

However, you won't have to wait long to see those bears turn into bulls. Starbucks is well-positioned to prevent the eventual exodus to its competitor.

This past summer, the company purchased San Francisco-based La Boulange bakery for $100 million. While the new food options may mean lower margins for Starbucks, CFO Troy Alstead probably has it right -- bakery goods are an "add-on" item. Starbucks customers look for a good cup of coffee and something to eat. Not necessarily the other way around -- which is what Panera caters to.

So, not only will Starbucks better satisfy its 1 in 3 customers who purchase food, but it will also increase the number of well-fed tummies. And with its customers buying more, Starbucks' stock price should soar.

3. Seattle's Best: Your morning fast-food restaurant
Over the past several years, Starbucks has more or less stood by while McDonald's moved into its coffee territory with the McCafe menu. While Starbucks and McDonald's customers don't necessarily overlap, McDonald's nonetheless has seen its revenues and store comps grow over the past two years, in part due to its McCafe expansion.

Well, now Starbucks can stop that with its Seattle's Best brand. In mid-March, the company announced plans to test 15 Seattle's Best drive-thru stores in the Dallas area. Not only will the restaurants offer quick coffee and specialty drinks, but they plan to go after McDonald's territory with breakfast menu items -- from stuffed "pretzel melts" to egg sandwiches.

If all goes well, drive-thrus should pop up throughout the country -- thereby propping up Starbucks' stock price.

Starbucks: The Third Place
From the beginning, CEO and founder Howard Schultz had a vision to make Starbucks "The Third Place" between home and work. Over the past few decades, Schultz has overseen smart expansion to realize that dream. Yet even as Starbucks stock hits new highs, the company has come under siege from competitors like Panera Bread and McDonald's. Luckily, Schultz is still at the helm and he has three concepts to get customers coming to Starbucks more than once a day.

So whether Starbucks becomes your neighborhood bar, your cafe-bakery, or your fast-food restaurant, one thing is certain: This company won't stop until it's become a Third Place for all your drinking and add-on eating needs. In turn, you should expect to see Starbucks stock reach new heights over the long term.

Still, you must keep on your toes, as McDonald's is just as relentless as Starbucks. Despite underperforming the market by 25% in 2012, the Golden Arches may soon reclaim its throne atop the restaurant industry. In our special premium report, our top analyst weighs in on McDonald's future and why you may want to buy a few shares of this global juggernaut. To learn more, click here now.

The article 3 Restaurant Concepts That'll Drive This Growth Stock Higher originally appeared on Fool.com.

Fool contributor Kevin Chen owns shares of Panera Bread. You can follow him on Twitter at @TMFKang or on Google+. The Motley Fool recommends McDonald's, Panera Bread, and Starbucks. The Motley Fool owns shares of McDonald's, Panera Bread, and Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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