1.

The data makes clear that Starbucks targets location with wealthier households (Median
Household Income of ~$65K vs. $50K), more people (Median population of ~31.5K vs.~3K),
younger age (37.6 years old vs. 41.7), and more educated / in the work force. None of this is
surprising if you know the brand, but back-filling intuition with data is an important way to have
more conviction at each set of data exploration and strategy.

Now, let’s look deeper into location. Below is a map

to help us understand, at a state-level, the number of Starbucks locations, with the size of the dot
representing the ratio of locations to population. For example, California has the most Starbucks
locations (~2,750 as of 2017; darkest red) while Washington has the most locations per person
(largest bubble).

What we can take from the above is not

only that Starbucks has more locations in proportion with population growth (i.e., higher
population states have more stores), but also that they over index in states with major metropolitan
areas (i.e., these locations have more stores overall and more stores per person).

2. Starbucks’ decision to not enter the Italian market could be strategically correct. The Italian
people would be reluctant to abandon their traditions and the risks of an eventual failure out
weight by far the possible rewards of succeeding. The image of the espresso experience is a
cornerstone of Starbucks’ business model, and they are not risking damaging it.
3.

Neighborhood income
Neighborhood income is one of many primary factors Starbucks consider before opening a new store.
An area with a minimum of $60,000 median household income is preferred for a new store.

Age
Although they try to reach as many customers as possible, Starbucks’ primary goal is to target regions
where most of the population is aged between 18–40.

Landmarks / Industrial area

Choosing a store location that’s near to industrial area or offices drive more customers to any business.
It’s the same with Starbucks, they prefer locations that are near offices or university or industrial area.

Smartphone ownership
Starbucks analyzes the areas with high smartphone ownership to grow their business and target ads
and rewards programs in less smartphone ownership areas to get people to use their applications.

Traffic
From traffic data, you can fetch important information, especially when it comes to deciding a new
store location. If there are several hundred vehicles pass from the location you want to open the store,
there are high chances that your business will grow. Starbucks prefers a traffic count of at least 25,000
vehicles per day. That’s right, PER DAY.

The Location
Visibility is everything to a business. Starbucks’ preferred locations are at signalized corners with
multiple access points. They prefer the main path with easy entry and exit points as they want to be as
visible as possible.

Commute side
As we already discussed, the first thing we need in the morning is coffee. Because most of us grab a
cup of coffee while going to work instead of on the way back home, that side of the commute is
preferred.

Parking

This might defer from country to country, city to city, or one location to another, but Starbucks prefers
a dedicated parking space for a minimum of 20 vehicles.

4.
o The Factor-Rating Method
o Locational Cost–Volume Analysis
o The Center-of-Gravity Method
o Transportation Model