Starbucks Coffee – Would It Be Any Better Than This..

Starbucks Coffee, sometimes referred to 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 3 partners: Jerry Baldwin, Zev Siegel, and Gordon Bowker to sell high-quality coffee beans and equipment. In 1982, Howard Schultz, the existing Chairman and CEO joined the organization as the Director of promoting. He was surprised by the recognition of the espresso bars in Italy after he traveled to Milan in 1983. Back to the US, he convinced the founders of Starbucks to promote 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 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 business currently has about 16,000 stores, employs 172,000 partners, AKA employees as of September 2007 in 44 countries. It offers annual sales of over $10B with a lot of recent quarterly revenue being $2.526B. About 85% of Starbucks revenue arises from company-operated443 stores.

Starbucks will not franchise its operations and contains no wants to franchises in foreseeable future. In Canada And America, most stores are company-operated. You could 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 property which would otherwise unavailable. Starbucks receives licensee fees and royalties from the licensed locations. At these licensed retail locations, the staff are considered employees of this specific retailer, not Starbucks. Since 2008 it has 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 plans to open 1020 US stores in 2008, under 400 stores in 2009 down from 1800 stores in2007. Furthermore, additionally, it plans 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. What this means is Starbucks is very responsive to economy downturn as noticed in 2007 and 2008 compared to Burger Kings and McDonald’s. This may be the key reason sales at stores in the US open at 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 organization wants 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 is usually a indication of desperation. On April 22, 2008 Starbucks cut its outlook for that year citing weak economy.

Calorie & Sugar: Starbucks drinks get more sugar and calorie where individuals are more and more concerned because of 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 turns into a trend that consumers decide to reduce on the sugar drinks, or adhere to low-carb diets then it could have impact on Starbucks revenue.

Competition: McDonald’s, Wendy’s and Dunkin Donuts now also provide espresso at lower prices to compete with Starbucks. They are going to capture some revenue from Starbucks, especially from cost-conscious customers. The present Starbucks prices are already pretty high; it’s quite hard for Starbucks to boost the costs soon without affecting the targeted traffic to its stores.

High-expenses business structure: while Starbucks profit margin is high as it pays the average $1.42 per pound for the unroasted coffee, its organization is very labor intensive as with every other foods businesses. It requires between 10-20 employees to operate 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 since 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 normally only accessible to key employees or managers within the restaurant industry. Historically, the expenses of those health benefits rise faster than the rate of inflation. In the end, they might have negative influence on Starbucks main point here. Should Starbucks not perform well, it might be under pressure as being a public company to close more stores.