Starbucks Coffee, sometimes known as Fourbucks Coffee is the biggest 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 market high-quality coffee beans and equipment. In 1982, Howard Schultz, the present Chairman and CEO joined the company as the Director of advertising. He was impressed by the popularity of the espresso bars in Italy after he traveled to Milan in 1983. Back to the usa, he persuaded the founders of Starbucks to market both coffee beans and espresso beverages. However, the concept was rejected so he left the business 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 business went public with the symbol SBUX in June 26, 1992 at $17/ share with 140 stores. Ever 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 initial overseas store in Tokyo, Japan in 1996. The organization currently has about 16,000 stores, employs 172,000 partners, AKA employees at the time of September 2007 in 44 countries. It offers annual sales of more than $10B with many recent quarterly revenue being $2.526B. About 85% of Starbucks revenue arises from company-operated443 stores.
Starbucks fails to franchise its operations and it has no intends 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 provide access to real estate property which will otherwise unavailable. Starbucks receives licensee fees and royalties from all of these licensed locations. At these licensed retail locations, the staff are considered employees of the specific retailer, not Starbucks. At the time of 2008 it provides 7087 company-operated stores and 4081 licensed stores in america. Internationally it has 1796 company operated stores and 2792 joint-venture or licensed stores in 43 foreign countries. The pace of expansion is reducing because the company intends to open 1020 US stores in 2008, lower than 400 stores in 2009 down from 1800 stores in2007. Additionally, it also wants to close 100 stores in 2008.
Recession-sensitivity: a hungry man can survive with a Big Mac & fries but could live without a four-buck Frappuccino. This implies Starbucks is quite sensitive to economy downturn as observed in 2007 and 2008 when compared with Burger Kings and McDonald’s. This can be the primary reason sales at stores in america open at the very least per year are required a mid single-digit percentage decline, the very first 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 could be a symbol 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 by which individuals are more and more concerned because of explosion of obesity and diabetes epidemic in the united states. For instance, 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 turns into a trend that consumers decide to cut down on the sugar drinks, or stick to low-carb diets then it may have influence on Starbucks revenue.
Competition: McDonald’s, Wendy’s and Dunkin Donuts now offer espresso at affordable prices to contend with Starbucks. They are going to capture some revenue from Starbucks, especially from cost-conscious customers. The current Starbucks charges are already pretty high; it’s very hard for Starbucks to increase the costs in the near future without affecting the visitors to its stores.
High-expenses business design: while Starbucks profit margin is high as it pays a typical $1.42 per pound for that unroasted coffee, its organization is very labor intensive as with any other foods businesses. It will take between 10-20 employees to perform 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 work for in the united states in 2008 by the Fortune magazine employee’s survey. What is perfect for employees might not be good for the employers. These benefits are usually only available to key employees or managers in the restaurant industry. Historically, the expenses of such health advantages rise faster compared to rate of inflation. Over time, they could have negative influence on Starbucks bottom line. Should Starbucks not work well, it might be under pressure as a public company to close more stores.