Starbucks Coffee, sometimes referred to 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 market 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 impressed 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 promote 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 Starbucks Hours Sunday 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 very first 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 well over $10B with most recent quarterly revenue being $2.526B. About 85% of Starbucks revenue originates from company-operated stores.
Starbucks fails to franchise its operations and contains 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 offer use of real estate which may otherwise unavailable. Starbucks receives licensee fees and royalties from these licensed locations. At these licensed retail locations, the personnel are considered employees of that specific retailer, not Starbucks. At the time of 2008 it offers 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, lower than 400 stores in 2009 down from 1800 stores in2007. In addition, in addition, it intends to close 100 stores in 2008.
Recession-sensitivity: a hungry man can survive using a Big Mac & fries but can live without a four-buck Frappuccino. This means What Time Does Starbucks Open is extremely responsive to economy downturn as observed in 2007 and 2008 compared to Burger Kings and McDonald’s. This may be the key reason sales at stores in america open at the very least annually are expected a mid single-digit percentage decline, the first drop ever. It triggers Howard Schultz to return to the CEO post. The company 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 may be a sign of desperation. On April 22, 2008 Starbucks cut its outlook for that year citing weak economy.
Calorie & Sugar: Starbucks drinks acquire more sugar and calorie where consumers are more and more concerned due to explosion of obesity and diabetes epidemic in america. 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. When it becomes a trend that consumers choose to cut down on the sugar drinks, or stick to low-carb diets this will have effect on Starbucks revenue.
Competition: McDonald’s, Wendy’s and Dunkin Donuts now also offer espresso at lower prices to contest 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 increase the costs in the future without affecting the visitors to its stores.
High-expenses business model: while Starbucks profit margin is high because it pays the 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 since the 7-th best company to work for in america in 2008 from the Fortune magazine employee’s survey. What is useful for employees may not good for the employers. These benefits are normally only available to key employees or managers inside the restaurant industry. Historically, the costs of those health benefits rise faster than the rate of inflation. Within the long run, they may have negative effect on Starbucks bottom line. Should https://www.Headquarterscomplaints.Com/Starbucks-Corporate-Office-Hq-Contact/ not perform well, it may be under pressure being a public company to close more stores.