Starbucks is the test case that every LDS investor eventually faces. It's one of the largest consumer discretionary companies in the world. It's in every retail ETF. It's probably in your 401(k) target date fund whether you want it or not. And it's the single cleanest example of a stock that LDS Word of Wisdom principles exclude. Let me walk through the whole question.

The Scripture

Doctrine and Covenants 89:9 says, "And again, hot drinks are not for the body or belly." When Joseph Smith received this revelation in 1833, the term "hot drinks" was ambiguous. It could have meant any drink served hot. Early church leaders, including Hyrum Smith (Joseph's brother) and later Joseph F. Smith, clarified that "hot drinks" specifically meant coffee and tea.

Brigham Young, in remarks recorded in the Journal of Discourses, reinforced this interpretation. By the early 20th century, the understanding that "hot drinks" meant coffee and tea was standard throughout the church. It was formalized as a requirement for temple attendance in 1921 under church president Heber J. Grant, making the Word of Wisdom a binding commandment with temple recommend implications.

The interpretation has been consistent for over a century. Coffee is excluded under the Word of Wisdom. Members who drink coffee cannot hold temple recommends. This is not a gray area in LDS practice.

What Starbucks Actually Is

Starbucks (SBUX) is the world's largest coffee retail chain. Founded in Seattle in 1971, it now operates over 38,000 stores globally. Total revenue for fiscal year 2024 was roughly $36 billion. The business is organized into three main segments:

North America Retail: roughly $26 billion in revenue, about 72% of total. This is the core Starbucks stores in the US and Canada, which sell coffee drinks, espresso drinks, brewed coffee, cold brew, tea, refreshers, frappuccinos, food, and packaged goods. Coffee and coffee-based drinks are the dominant product category.

International: roughly $7 billion in revenue, about 19% of total. Stores in China, Japan, UK, Europe, Latin America. Same product mix as North America, with regional variations.

Channel Development: roughly $3 billion in revenue, about 8% of total. This is packaged coffee sold through grocery stores (K-Cups, ground coffee, whole beans), bottled Frappuccino drinks, ready-to-drink coffee, and Starbucks-branded products in third-party retail channels. This segment also includes the partnership with Nestle, which licenses Starbucks-branded products for global distribution.

Across all segments, coffee is the product. Even the food (pastries, sandwiches, oatmeal) is sold primarily to customers who are buying coffee. The tea category (Teavana) exists but is minor. The ready-to-drink category includes some non-coffee products but is a small portion of the total.

If you had to estimate the percentage of Starbucks revenue derived from coffee products specifically, it's probably 75-85%, with the remainder coming from food, tea, and other beverages. This is a pure-play coffee company in any meaningful sense.

Why It Fails Every LDS Screen

Under even the most permissive LDS Word of Wisdom screen, Starbucks fails. Here's why:

Under a 5% threshold: SBUX has roughly 75-85% coffee revenue. It's 15-17x over any reasonable threshold.

Under a 25% threshold: Still fails by a huge margin.

Under a 50% threshold: Still fails. Even in the most lenient case where you only exclude companies where coffee is more than half the business, SBUX is clearly out.

Under a pure-play exclusion: SBUX is a pure-play coffee company. Out.

Unlike Nestle (where coffee is about 20% of a diverse portfolio) or Coca-Cola (where Costa Coffee is maybe 5-8% of total revenue), Starbucks has no realistic path to passing an LDS screen. The entire corporate identity is coffee. The brand is coffee. The products are overwhelmingly coffee.

The Financial Profile

Let me give you the business picture for context. Starbucks is, financially, a very attractive company. Its moat is strong (brand, location density, loyalty program), its margins are healthy (operating margin around 15-17%), its growth has been consistent, and it has returned capital to shareholders through dividends and buybacks.

Over the past 10 years, SBUX has delivered roughly 8-12% annualized returns depending on the exact period. That's in line with or slightly above the S&P 500. Its dividend yield is typically 2-3%, making it a reasonable income stock in addition to its growth characteristics.

From a purely financial perspective, Starbucks is the kind of stock that most financial advisors would include in a diversified growth portfolio. The business is durable, the brand is strong, and the cash flow is reliable.

For LDS investors, the financial attractiveness is beside the point. The Word of Wisdom exclusion is scriptural, not financial.

What Happens When You Exclude SBUX From Your Portfolio

Let me put some numbers on this. SBUX has a market cap of roughly $100 billion as of early 2026. It's about 0.25% of the total S&P 500 market cap. Excluding it from a US equity portfolio has essentially no measurable impact on diversification or expected returns.

If you're building a portfolio from scratch and you drop SBUX, you can replace it with any number of consumer discretionary or restaurant stocks that pass LDS screens. Options include:

McDonald's (MCD): global restaurant chain, about $25 billion in revenue. Coffee exists on the menu (McCafe) but is a minor portion of sales. Some LDS investors exclude MCD on the grounds that coffee is on the menu; others include it because coffee revenue is under 5% of the total business and the corporate identity isn't about coffee.

Chipotle Mexican Grill (CMG): food-focused restaurant chain, no coffee. Clean LDS screen.

Domino's Pizza (DPZ): pizza delivery, no coffee. Clean.

Yum Brands (YUM): owns Taco Bell, KFC, Pizza Hut, Habit Burger. Some coffee on the menu at some concepts but not central. Generally passes a 5% threshold.

Restaurant Brands International (QSR): owns Burger King, Tim Hortons, Popeyes, Firehouse Subs. Tim Hortons is a coffee chain, so QSR has significant coffee exposure (Tim Hortons is roughly 40% of QSR revenue). QSR fails a strict LDS screen because of the Tim Hortons exposure.

Darden Restaurants (DRI): owns Olive Garden, LongHorn Steakhouse, others. No coffee focus. Clean.

Texas Roadhouse (TXRH): steakhouse chain. No coffee focus. Clean.

The replacement universe is substantial. Excluding Starbucks doesn't impair your ability to build a diversified consumer discretionary sleeve.

ETFs and the Starbucks Problem

Here's where it gets tricky. Most US equity ETFs include Starbucks because of its market cap. If you hold the Vanguard Total Stock Market ETF (VTI), the SPDR S&P 500 ETF (SPY), the Vanguard Consumer Discretionary ETF (VCR), the iShares Russell 1000 Growth ETF (IWF), or dozens of other broad-market or style ETFs, you own Starbucks through the fund.

For LDS investors who want Word of Wisdom compliance in their portfolio, this creates a practical question. Do you:

Option 1: Accept small SBUX exposure through broad ETFs. The logic is that the exposure is diluted (SBUX is 0.25% of VTI), the intent wasn't to buy SBUX specifically, and the practical compromise is acceptable. This is the approach most LDS investors take when they use broad-market funds in their 401(k) or IRA.

Option 2: Build a direct stock portfolio that excludes SBUX. This gives you clean LDS compliance but requires more active management and typically higher trading costs. It also loses some diversification benefits of broad ETFs.

Option 3: Use faith-based ETFs that pre-screen for LDS values. There are a few LDS-oriented fund products, though the universe is smaller than for Christian or Islamic values funds. The Inspire Faithful Funds (IBUY, BIBL) are Christian-oriented and have significant LDS-relevant overlap because they exclude alcohol, tobacco, and other sin categories. They don't specifically exclude coffee, so they don't fully meet LDS requirements.

Option 4: Use direct indexing to customize a broad index. Services like Wealthfront, Fidelity, Schwab, and others offer direct indexing where you own the individual stocks of an index and can exclude specific names. This lets you own the S&P 500 minus SBUX and other Word of Wisdom exclusions. Direct indexing has become more accessible and affordable and is the cleanest practical solution for LDS investors who want broad market exposure with faith-based exclusions.

Does Excluding SBUX Hurt Returns?

I mentioned the performance question briefly. Let me expand.

Academic studies on faith-based screening have generally found that the performance impact of excluding a small number of names is negligible over long periods. The S&P 500 minus SBUX tracks the S&P 500 very closely because SBUX is 0.25% of the index. Over 20 years, the tracking difference is on the order of 0.05-0.15% annualized, which is essentially noise.

The bigger performance variable is whether your screening approach is consistent. Investors who exclude SBUX but inconsistently include other problematic names tend to have noisier returns. Investors who apply clear screens consistently end up with portfolios that track their benchmarks within a reasonable band.

For LDS investors specifically, the most meaningful exclusions are alcohol and tobacco, which together represent 2-3% of the S&P 500. SBUX is only about 0.25% on top of that. The total screening universe is small.

A Note on Tea and Starbucks

Starbucks bought Teavana in 2012 and integrated the tea brand into its stores. Tea products are sold alongside coffee throughout the Starbucks network. Teavana retail stores were closed by 2018, but Teavana-branded tea is still sold through Starbucks stores and some grocery channels.

Under a strict Word of Wisdom interpretation that includes tea, the Teavana exposure adds to the LDS exclusion case, though it doesn't change the conclusion. SBUX is already excluded based on coffee alone.

Under the more lenient modern interpretation where tea is treated as permitted (particularly herbal and iced tea), the Teavana exposure is a smaller concern. But since SBUX is already out for coffee, this doesn't matter.

The Bigger Principle

The Starbucks exclusion illustrates an important principle for LDS investing. The Word of Wisdom is a scripture, not an ESG recommendation. It's not a preference or a lifestyle choice for observant members. It's a binding commandment with real consequences for temple participation and church standing.

Applying the Word of Wisdom to stock screening is therefore more like applying kashrut to food purchases than like applying ESG preferences to a portfolio. It's a matter of religious observance, not just ethical preference.

This framing matters because it affects how strictly you screen, how you handle edge cases, and whether you compromise when convenient. An LDS investor who takes the Word of Wisdom seriously should treat SBUX the same way a strict kosher-keeping Jew treats a pork product: out, full stop, not a gray area.

Practical Recommendation

For LDS investors building a portfolio that respects the Word of Wisdom:

Exclude SBUX directly if you're picking stocks. This is the cleanest choice.
If you're using broad ETFs, use direct indexing to customize. Schwab's Personalized Indexing and similar products let you exclude SBUX and other restricted names.
If direct indexing isn't available in your account (some 401(k)s restrict options), consider whether the SBUX exposure in your target date fund is acceptable to you. Many LDS investors accept this compromise because the exposure is tiny and the 401(k) match is valuable.
In taxable accounts where you have full control, there's no reason to include SBUX. The financial profile is attractive, but the Word of Wisdom exclusion is scriptural.

Bottom Line

Starbucks is the paradigmatic example of an LDS exclusion. The business is overwhelmingly coffee. Coffee is explicitly excluded by the Word of Wisdom. There's no interpretive flexibility here. For LDS investors who take D&C 89 seriously, SBUX is out. The good news is that the financial impact is minimal, the replacement options are abundant, and the screening logic is clear. Build your portfolio around the Word of Wisdom, and Starbucks simply doesn't belong in it.

Why LDS Investors Avoid Coffee Stocks: Starbucks (SBUX) Analysis