Will McLane & Max Howard (@CapitalCapi): Starbucks (SBUX), Dutch Bros (BROS), and Investing in Consumer Brands

Dutch Bros and Seven Brew have structurally taken 16 points of beverage share from Starbucks while Starbucks' labor cuts look unsustainable.

• Starbucks short thesis: Dutch Bros and Seven Brew have each taken 8 points of beverage wallet share from Starbucks over four years (16 points combined), with only 8.3% of new units replacing an existing coffee shop—implying mostly incremental, not substitutive, competition against SBUX.
• Labor economics squeeze margins: Starbucks cut shop staffing from ~26.8 employees (FY2022) to a trough of ~20 (FY2024), now back to 21.3 after a $500M labor investment, versus Dutch Bros/Seven Brew's ~27-employee norm—implying further margin pressure, not a one-time recovery as Street models assume.

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