Yahoo Finance Uh-Oh: How Will Starbucks’ E. Coli Concerns Affect the Stock?
How High Will Starbucks Stock Keep Climbing?
The outbreak
Recently, some US food outlets were hit by an E. Coli outbreak that affected customers. Chipotle Mexican Grill (CMG) was the most affected, with the first reports of E. Coli linked to the company. But other retailers have also been affected, and Starbucks (SBUX) is among them.
Affected areas
According to the FDA, food products containing a celery and onion blend have been recalled from about 18 states. The recall started in the Western states and seems to have moved to the Midwestern states.
Starbucks has about 23,000 total stores in its system, of which 12,200 stores are located in the United States alone. But not all stores in the United States will be affected by the recall.
Some restaurants take stricter measures
Chipotle Mexican Grill (CMG) was one of the restaurants that were affected the most by the outbreak. In one report, the CDC Center of Disease Control and Prevention stated, “Washington and Oregon report that most of the ill people ate at several locations of Chipotle Mexican Grill before getting sick.” As a result, the company shut down about 43 of its stores for a week in the affected states. To read more about how Chipotle was affected, read Will Chipotle Continue Its Downward Momentum in 2H15?
Chipotle formed about 3% of the Consumer Discretionary Select Sector SPRD’s (XLY) portfolio as of November 2015. XLY also invests 4% of its total holdings in McDonald’s (MCD) and 0.3% of its total holdings in Darden Restaurants (DRI).
Given the seriousness of this issue, we’ll see how much Starbucks will be affected in the next part of this series.
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