Starbucks needs better price incentives on its menu: Analyst

Starbucks (SBUX) stock has dove lower this week after the beverage giant missed second-quarter earnings estimates, the stock's worst post-earnings performance since 2000.

Citi Bank Restaurant Sector Analyst Jon Tower joins Catalysts to discuss how Starbucks can turn its performance around and recover losses.

"[Starbucks] is effectively, by footprint, the second-largest brand in the United States from a restaurant standpoint," Tower explains, "and the second largest brand probably needs to have a value offering on their menu."

He believes that the rising cost of Starbucks' food and beverages is likely causing sales to drop among the average consumer, and the company should start rolling out incentives to get them to return regularly. "What they're charging is not an alluring proposition to the average customer," he adds, pointing to a greater need for cost-cutting measures in Starbucks' greater business model if price easings are not enacted.

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This post was written by Melanie Riehl