Starbucks Coffee, sometimes called Fourbucks Coffee will be 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 astounded by the buzz 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 thought 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 Stop Serving Breakfast with $3.8M and renamed Il Giornale coffee bars to Starbucks and turned it into 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 very 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 has annual sales of more than $10B with many recent quarterly revenue being $2.526B. About 85% of Starbucks revenue originates from company-operated stores.
Starbucks does not franchise its operations and has no intends to franchises in foreseeable 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 usage of property which will otherwise unavailable. Starbucks receives licensee fees and royalties from these licensed locations. At these licensed retail locations, the staff are considered employees of the specific retailer, not Starbucks. As of 2008 it offers 7087 company-operated stores and 4081 licensed stores in the US. Internationally it provides 1796 company operated stores and 2792 joint-venture or licensed stores in 43 foreign countries. The pace of expansion is slowing down because the company plans to open 1020 US stores in 2008, under 400 stores in 2009 down from 1800 stores in2007. Additionally, it also plans to close 100 stores in 2008.
Recession-sensitivity: a hungry man can survive with a Big Mac & fries but can live without a four-buck Frappuccino. What this means is Starbucks Hours Today is quite responsive to economy downturn as observed in 2007 and 2008 compared to Burger Kings and McDonald’s. This may be the key reason sales at stores in america open a minimum of per year are anticipated 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 may be a sign of desperation. On April 22, 2008 Starbucks cut its outlook for that year citing weak economy.
Calorie & Sugar: Starbucks drinks have more sugar and calorie by which individuals are increasingly more concerned due to explosion of obesity and diabetes epidemic in america. For 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. When it gets to be a trend that consumers opt to cut down on the sugar drinks, or stick to low-carb diets then it will have influence on Starbucks revenue.
Competition: McDonald’s, Wendy’s and Dunkin Donuts now also provide espresso at lower prices to contend with Starbucks. They will likely capture some revenue from Starbucks, especially from cost-conscious customers. The pvmpqb Starbucks charges are already pretty high; it’s very hard for Starbucks to increase the prices soon without affecting the traffic to its stores.
High-expenses business model: while Starbucks profit margin is high because it pays the average $1.42 per pound for the unroasted coffee, its organization is very labor intensive just like any other foods businesses. It takes between 10-20 employees to perform one store. All eligible part-time and full-time partners in the US 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 united states in 2008 from the Fortune magazine employee’s survey. What is good for employees may not really good for the employers. These benefits are usually only accessible to key employees or managers in the restaurant industry. Historically, the costs of those health advantages rise faster compared to the rate of inflation. In the long run, they may have negative impact on Starbucks bottom line. Should Starbucks not perform well, it may be under pressure as being a public company to close more stores.