Starbucks Coffee, sometimes referred to as 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 sell 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 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 sell 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 Starbucks Hours 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 initial overseas store in Tokyo, Japan in 1996. The company currently has about 16,000 stores, employs 172,000 partners, AKA employees since September 2007 in 44 countries. It provides annual sales of over $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 wants 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 offer usage of real estate which may otherwise unavailable. Starbucks receives licensee fees and royalties from the licensed locations. At these licensed retail locations, the staff are considered employees of that specific retailer, not Starbucks. As of 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 because the company plans to open 1020 US stores in 2008, under 400 stores during 2009 down from 1800 stores in2007. Additionally, in addition, it plans 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 implies Starbucks Hours is extremely understanding of economy downturn as observed in 2007 and 2008 in comparison to Burger Kings and McDonald’s. This may be the main reason sales at stores in america open at the very least annually are required a mid single-digit percentage decline, the first drop ever. It triggers Howard Schultz to go back to the CEO post. The company intends 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 your year citing weak economy.
Calorie & Sugar: Starbucks drinks get more sugar and calorie by which individuals are a lot 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. If this gets to be a trend that consumers choose to cut down on the sugar drinks, or stick to low-carb diets this may have effect on Starbucks revenue.
Competition: McDonald’s, Wendy’s and Dunkin Donuts now offer espresso at lower prices to compete with Starbucks. They will capture some revenue from Starbucks, especially from cost-conscious customers. The pvmpqb Starbucks costs are already pretty high; it’s very hard for Starbucks to boost the values in the near future without affecting the visitors to its stores.
High-expenses business model: while Starbucks profit margin is high as it pays an average $1.42 per pound for that unroasted coffee, its organization is very labor intensive just like every other foods businesses. It will take between 10-20 employees to operate one store. All eligible part time and full-time partners in the US and Canada receive benefit package comprising stock option plan, 401k with company matching, medical, dental & vision coverage. Starbucks is voted since the 7-th best company to work for in the US in 2008 by the Fortune magazine employee’s survey. What is perfect for employees may not be beneficial to the employers. These benefits are typically only accessible to key employees or managers within 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 influence on Starbucks bottom line. Should Starbucks Customer Service Phone Number not perform well, it may be under pressure as being a public company to close more stores.