Starbucks Coffee, sometimes known as 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 Chief executive officer 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 sell 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 Close 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 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 over $10B with a lot of recent quarterly revenue being $2.526B. About 85% of Starbucks revenue comes from company-operated stores.
Starbucks fails to 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 supply usage of 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 workers are considered employees of the specific retailer, not Starbucks. As of 2008 it has 7087 company-operated stores and 4081 licensed stores in the united states. 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 since the company plans to open 1020 US stores in 2008, under 400 stores during 2009 down from 1800 stores in2007. Additionally, additionally, it wants 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 What Time Does Starbucks Start Serving Breakfast is quite sensitive to economy downturn as seen in 2007 and 2008 in comparison to Burger Kings and McDonald’s. This may be the key reason sales at stores in the US open a minimum of per year are required a mid single-digit percentage decline, the initial 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 become a sign of desperation. On April 22, 2008 Starbucks cut its outlook for your year citing weak economy.
Calorie & Sugar: Starbucks drinks have more sugar and calorie by which people are more and more concerned as a result of 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 gets to be a trend that consumers choose to cut down on the sugar drinks, or stick to low-carb diets it may have influence on Starbucks revenue.
Competition: McDonald’s, Wendy’s and Dunkin Donuts now also provide espresso at lower prices to compete with Starbucks. They will likely 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 soon without affecting the targeted traffic to its stores.
High-expenses business design: while Starbucks profit margin is high since it pays the average $1.42 per pound for that unroasted coffee, its company is very labor intensive just like any other foods businesses. It requires between 10-20 employees to run one store. All eligible part time and full time partners in the united states and Canada receive benefit package composed of 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 united states in 2008 from the Fortune magazine employee’s survey. What is perfect for employees may not good for the employers. These benefits are normally only accessible to key employees or managers inside the restaurant industry. Historically, the expense of such health advantages rise faster compared to rate of inflation. Within the long run, they may have negative influence on Starbucks bottom line. Should Starbucks Corporate Office Address not perform well, it may be under pressure as being a public company to close more stores.