Starbucks Coffee, sometimes called Fourbucks Coffee is definitely the largest coffeehouse chain in the world. It opened its first store in 1971 in Seattle’s waterfront Pike Place Market by three partners: Jerry Baldwin, Zev Siegel, and Gordon Bowker to promote high-quality coffee beans and equipment. In 1982, Howard Schultz, the current Chairman and CEO joined the company as the Director of promoting. He was surprised by the popularity of the espresso bars in Italy after he traveled to Milan in 1983. Back to the US, he convinced the founders of Starbucks to market both coffee beans and espresso beverages. However, the idea was rejected so he left the company and founded Il Giornale coffee bar chain in 1985. In 1987 Howard Schultz and Il Giornale bought What Time Does Starbucks Open Today with $3.8M and renamed Il Giornale coffee bars to Starbucks and turned it in to the Starbucks you know today. The company went public with the symbol SBUX in June 26, 1992 at $17/ share with 140 stores. Since then the stock has split 5 times. As of May 2008, SBUX is traded at about $16, down from the high of $39.43 in November 2006.
Starbucks opened the first overseas store in Tokyo, Japan in 1996. The company currently has about 16,000 stores, employs 172,000 partners, AKA employees at the time of September 2007 in 44 countries. It provides annual sales well over $10B with a lot of recent quarterly revenue being $2.526B. About 85% of Starbucks revenue originates from company-operated stores.
Starbucks will not franchise its operations and has no plans to franchises in near future. In North America, most stores are company-operated. You may see some Starbucks stores inside Target, major supermarkets, University campuses, Hospitals, and Airports. These stores are operated under licensing agreements to supply use of real estate property which will otherwise unavailable. Starbucks receives licensee fees and royalties from the licensed locations. At these licensed retail locations, the personnel are considered employees of that specific retailer, not Starbucks. Since 2008 it has 7087 company-operated stores and 4081 licensed stores in the US. Internationally it has 1796 company operated stores and 2792 joint-venture or licensed stores in 43 foreign countries. The pace of expansion is slowing down as the company wants to open 1020 US stores in 2008, lower than 400 stores in 2009 down from 1800 stores in2007. Additionally, additionally, it intends to close 100 stores in 2008.
Recession-sensitivity: a hungry man can survive using a Big Mac & fries but can live with no four-buck Frappuccino. This means Starbucks Opening Times is quite responsive to economy downturn as seen in 2007 and 2008 in comparison to Burger Kings and McDonald’s. This may be the main reason sales at stores in the united states open at least annually are required a mid single-digit percentage decline, the initial drop ever. It triggers Howard Schultz to return to the CEO post. The company plans to double its marketing spending to $100M in 2008 to drum up sales. It began an aggressive coupons campaign offering free drinks every Wednesday through May 28, 2008. This may be considered a sign of desperation. On April 22, 2008 Starbucks cut its outlook for that year citing weak economy.
Calorie & Sugar: Starbucks drinks acquire more sugar and calorie in which consumers are a lot more concerned due to explosion of obesity and diabetes epidemic in the united states. As an example, its Strawberries & Crème Frappuccino® Blended Crème – whip has 120 grams (over 1/4 lb) of sugar, and 750 calorie on its Venti 24 oz size. If it becomes a trend that consumers choose to cut down on the sugar drinks, or stick to low-carb diets it may have impact on Starbucks revenue.
Competition: McDonald’s, Wendy’s and Dunkin Donuts now offer espresso at lower prices to contend with Starbucks. They will likely capture some revenue from Starbucks, especially from cost-conscious customers. The pvmpqb Starbucks prices are already pretty high; it’s very hard for Starbucks to increase the prices in the near future without affecting the traffic to its stores.
High-expenses business structure: while Starbucks profit margin is high because it pays the average $1.42 per pound for the unroasted coffee, its company is very labor intensive just like every other foods businesses. It requires between 10-20 employees to operate one store. All eligible part-time and full-time partners in the united states and Canada receive benefit package consisting of stock option plan, 401k with company matching, medical, dental & vision coverage. Starbucks is voted because the 7-th best company to work for in the US in 2008 from the Fortune magazine employee’s survey. What is useful for employees may not be great for the employers. These benefits are normally only accessible to key employees or managers in the restaurant industry. Historically, the expense of these health benefits rise faster than the rate of inflation. In the long run, they may have negative effect on Starbucks bottom line. Should Starbucks Corporate Office Address not perform well, it may be under pressure being a public company to close more stores.