Starbucks Coffee, sometimes known as Fourbucks Coffee is the biggest coffeehouse chain on the planet. 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 existing Chairman and CEO joined the business as the Director of advertising. He was impressed by the popularity of the coffee bars in Italy after he traveled to Milan in 1983. Back to the usa, he persuaded 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 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. 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 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 more than $10B with most recent quarterly revenue being $2.526B. About 85% of Starbucks revenue originates from company-operated443 stores.
Starbucks fails to franchise its operations and has no wants to franchises in near future. In The United States, most stores are company-operated. You might see some Starbucks stores inside Target, major supermarkets, University campuses, Hospitals, and Airports. These stores are operated under licensing agreements to offer use of real estate property which would otherwise unavailable. Starbucks receives licensee fees and royalties from the licensed locations. At these licensed retail locations, the personnel are considered employees of that specific retailer, not Starbucks. Since 2008 it provides 7087 company-operated stores and 4081 licensed stores in america. Internationally it provides 1796 company operated stores and 2792 joint-venture or licensed stores in 43 foreign countries. The pace of expansion is reducing since the company wants to open 1020 US stores in 2008, under 400 stores during 2009 down from 1800 stores in2007. Additionally, additionally, it intends to close 100 stores in 2008.
Recession-sensitivity: a hungry man can survive having a Big Mac & fries but could live without a four-buck Frappuccino. This implies Starbucks is quite understanding of economy downturn as observed in 2007 and 2008 in comparison to Burger Kings and McDonald’s. This might be the primary reason sales at stores in the united states open at least per year are required a mid single-digit percentage decline, the initial drop ever. It triggers Howard Schultz to return to the CEO post. The organization 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 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 where individuals are a lot more concerned due to explosion of obesity and diabetes epidemic in america. 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 stay with low-carb diets then it 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 likely capture some revenue from Starbucks, especially from cost-conscious customers. The existing Starbucks costs are already pretty high; it’s very hard for Starbucks to boost the prices in the near future without affecting the targeted traffic to its stores.
High-expenses business model: while Starbucks profit margin is high since it pays an average $1.42 per pound for your 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 US 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 US in 2008 through the Fortune magazine employee’s survey. What is perfect for employees might not be good for the employers. These benefits are usually only accessible to key employees or managers inside the restaurant industry. Historically, the costs of such health and fitness benefits rise faster compared to rate of inflation. In the long run, they could have negative influence on Starbucks main point here. Should Starbucks not perform well, it could be under pressure as being a public company to seal more stores.