Starbucks Coffee, sometimes called Fourbucks Coffee is 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 sell high-quality coffee beans and equipment. In 1982, Howard Schultz, the existing Chairman and CEO joined the company as the Director of advertising. He was astounded by the recognition of the espresso bars in Italy after he traveled to Milan in 1983. Back to the united states, he convinced the founders of Starbucks to market both coffee beans and espresso beverages. However, the thought was rejected so he left the organization and founded Il Giornale coffee bar chain in 1985. In 1987 Howard Schultz and Il Giornale bought https://www.storeholidayhours.org/starbucks-holiday-hours-open-closed-today with $3.8M and renamed Il Giornale coffee bars to Starbucks and turned it into the Starbucks you know today. The organization went public with the symbol SBUX in June 26, 1992 at $17/ share with 140 stores. Since that time 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 as of September 2007 in 44 countries. It offers annual sales of over $10B with most recent quarterly revenue being $2.526B. About 85% of Starbucks revenue comes from company-operated443 stores.
Starbucks does not franchise its operations and contains no intends to franchises in foreseeable future. In Canada And America, most stores are company-operated. You could see some Starbucks stores inside Target, major supermarkets, University campuses, Hospitals, and Airports. These stores are operated under licensing agreements to offer access to real estate which may otherwise unavailable. Starbucks receives licensee fees and royalties from all of these licensed locations. At these licensed retail locations, the workers are considered employees of the specific retailer, not Starbucks. Since 2008 it provides 7087 company-operated stores and 4081 licensed stores in america. Internationally it offers 1796 company operated stores and 2792 joint-venture or licensed stores in 43 foreign countries. The pace of expansion is reducing because the company plans to open 1020 US stores in 2008, less than 400 stores in 2009 down from 1800 stores in2007. Furthermore, additionally, it wants to close 100 stores in 2008.
Recession-sensitivity: a hungry man can survive using a Big Mac & fries but may live without a four-buck Frappuccino. This implies Starbucks is very responsive to economy downturn as seen in 2007 and 2008 compared to Burger Kings and McDonald’s. This may be the primary reason sales at stores in the US open at the very least a year are expected a mid single-digit percentage decline, the initial drop ever. It triggers Howard Schultz to go back to the CEO post. The organization 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 a indication of desperation. On April 22, 2008 Starbucks cut its outlook for the year citing weak economy.
Calorie & Sugar: Starbucks drinks acquire more sugar and calorie in which individuals are increasingly 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 this becomes a trend that consumers decide to minimize on the sugar drinks, or adhere to low-carb diets then it could have influence on Starbucks revenue.
Competition: McDonald’s, Wendy’s and Dunkin Donuts now also offer espresso at affordable prices to compete with Starbucks. They are going to capture some revenue from Starbucks, especially from cost-conscious customers. The present Starbucks costs are already pretty high; it’s quite hard for Starbucks to improve the values in the future without affecting the visitors to its stores.
High-expenses business model: while Starbucks profit margin is high because it pays the average $1.42 per pound for your unroasted coffee, its business is very labor intensive as with every other foods businesses. It takes 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 uqfpxd stock option plan, 401k with company matching, medical, dental & vision coverage. Starbucks is voted because the 7-th best company to get results for in the united states in 2008 from the Fortune magazine employee’s survey. What is perfect for employees might not be beneficial to the employers. These benefits are typically only available to key employees or managers in the restaurant industry. Historically, the costs of those health advantages rise faster compared to rate of inflation. In the end, they may have negative impact on Starbucks main point here. Should Starbucks not perform well, it might be under pressure as being a public company to seal more stores.