Starbucks Coffee, sometimes known as Fourbucks Coffee is 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 Chief executive officer joined the company as the Director of advertising. 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 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 Open Today 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 offers annual sales of over $10B with many recent quarterly revenue being $2.526B. About 85% of Starbucks revenue arises from company-operated stores.
Starbucks fails to franchise its operations and it 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 provide 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 the specific retailer, not Starbucks. As of 2008 it has 7087 company-operated stores and 4081 licensed stores in america. Internationally it offers 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. Furthermore, it also intends 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. This means Starbucks Hours Saturday is quite sensitive to economy downturn as noticed in 2007 and 2008 compared to Burger Kings and McDonald’s. This may be the primary reason sales at stores in the united states open at the very least a 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 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 that year citing weak economy.
Calorie & Sugar: Starbucks drinks have more sugar and calorie where consumers are more and more concerned because of explosion of obesity and diabetes epidemic in the US. 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 becomes a trend that consumers decide to cut down on the sugar drinks, or stick to low-carb diets then it will 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 pvmpqb Starbucks prices are already pretty high; it’s very hard for Starbucks to increase the values in the future without affecting the traffic to its stores.
High-expenses business structure: while Starbucks profit margin is high because 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 takes between 10-20 employees to operate 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 as the 7-th best company to work for in america in 2008 through the Fortune magazine employee’s survey. What is perfect for employees may not beneficial to the employers. These benefits are usually only accessible to key employees or managers in the restaurant industry. Historically, the expense of those health and fitness benefits rise faster than the rate of inflation. Within the long run, they may have negative influence on Starbucks bottom line. Should Starbucks Headquarters Phone Number not perform well, it may be under pressure as a public company to close more stores.