Running head: STARBUCKS 1

Starbucks: The Starbucks Experience

Amy Agnola

Arizona State University

OGL 260 – Module 3

September 11, 2021

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Starbucks: The Starbucks Experience

When thinking of grabbing a cup of coffee, Starbucks is more than likely one of the first

places that come to mind. Three men, Jerry Baldwin, Zev Siegl and Gordon Browker, first

founded Starbucks in 1971 at Seattle’s Pike Place Market. For the first five years, Starbucks only

sold coffee beans and no coffee beverages. They purchased coffee from Peet’s Coffee for a

while, and then bought directly from growers. In 1982, Howard Schultz was hired on as director

of retail operations and marketing. He took a trip to Italy in 1983 and saw the “potential to

develop a similar coffeehouse culture in Seattle” (“Company Timeline”, n.d.). With Schultz

innovated ideas; this brought the Starbucks market to grow rapidly. In the United States, in 1983,

sales grew from $50 million to $500 million five years later.

The Fiscal year of 2020 brought a harsh impact of business due to COVID-19 and having

to shut down café stores, only being able to operate through drive thru and mobile orders.

Looking through the highlights of Q3 Fiscal 2021, there is a 73% increase in sales/transaction

globally while the US stores sales increased to 83%. There was an increase of 78% in

consolidated net revenue of $7.5 billion to the prior year. President and CEO of Starbucks, Kevin

Johnson, believes that partners continue to create great human reconnection and rise to the

occasion for our customers by elevating the Starbucks Experience, which will evidentially result

in executing our ‘Growth of Sale’ agenda to be established to the full.

Starbucks annual cash flow from operating activities for 2018 was $11.938B, a 180.77%

increase from 2017. The cash flow from operating activities for 2019 was $5.047B, a 57.72%

decline from 2018. In 2020 was $1.598B, a 68.34% decline from 2019. Starbucks cash flow from

operating activities for the twelve months ending June 30, 2021 was $10.621B, a 42.28%
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increase year-over-year. Starbucks cash flow from operating activities for the quarter ending

June 30, 2021 was $4.468B, a 4072.18% increase year-over-year (“Starbucks cash flow from

operating activities 2006-2021: SBUX”, 2021). We can see that the cash flow from 2017 to 2018

increased while from 2018 to 2020, cash flow was declining. By 2021, following the year of

great impact, cash flow began to rise again.

Being innovative is constant at Starbucks. Starbucks continues to expand on advancing

customer experiences and creating new beverage platforms. In order to expand digital customer

relationships, five shifts in consumer behavior are needed. First, it is an important need to be

seen and experience a sentimental connection to others. Customer connection scores are a

priority at Starbucks, making great experiences between the baristas and customers. Baristas are

always to assume the best in their customers and make the moment right. Second, consumers

seek for experiences that fit their lifestyle effortlessly. Third, there is an appreciation for

consistent experiences. Fourth, there’s an important need for both high-quality and sustainable

products and experiences by being able to support people and the planet. And lastly, being most

reliable to brands with strong values (“Starbucks Outlines Vision for the Future and Reaffirms

Strategy for Continued Growth at Scale”, 2021).

During most of the year of 2020, COVID-19 created a big disruption in the economic

atmosphere. Leaving Starbucks to close all their cafes until further notice with only having

access to their drive-thru stores and mobile. With that said, risk has different meanings to

different individuals. It all depends on the context and how they feel in those moments with

taking chances. Impending cash flows occur due to the potential variability of risk. Having a

wider sort of possibilities bring greater the risk (Keown, Martin & Petty, 2014, p. 187). With
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COVID-19 being a very unpredictable time, there were a lot of risks that occurred in their

business in terms of products, employees, etc.

References

Company profile. (2020). Starbucks Stories & News. Retrieved Sept. 5, 2021 from

https://stories.starbucks.com/uploads/2019/01/AboutUs-Company-Profile-1.6.21-

FINAL.pdf.

Company timeline. (2020). Starbucks Stories & News. Retrieved Sept. 5, 2021 from

https://stories.starbucks.com/uploads/2019/01/AboutUs-Company-Timeline-1.6.21-

FINAL.pdf.

Forbes Magazine. (2021). Starbucks (SBUX, 2021). Retrieved Sept. 9, 2021 from

https://www.forbes.com/companies/starbucks/?sh=17a8e17428ac.

History and background of Starbucks. MBA Knowledge Base. (2018, September 20).

https://www.mbaknol.com/business-history/history-and-background-of-starbucks/.

Keown, A. J., Martin, J. D., & Petty, J. W. (2014). Foundations of finance: The logic and

practice of financial management (8th ed.). Upper Saddle River, NJ: Pearson.

Starbucks cash flow from operating activities 2006-2021: SBUX. Macrotrends. (2021).

https://www.macrotrends.net/stocks/charts/SBUX/starbucks/cash-flow-from-operating-

activities.

Starbucks Outlines Vision for the Future and Reaffirms Strategy for Continued Growth at Scale.

Starbucks. (2020, December 9). https://stories.starbucks.com/press/2020/starbucks-

outlines-vision-for-the-future-and-reaffirms-strategy-for-continued-growth-at-scale/.
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Starbucks reports record Q3 fiscal 2021 Results. Starbucks Corporation - Starbucks Reports

Record Q3 Fiscal 2021 Results. (2021, July 27). https://investor.starbucks.com/press-

releases/financial-releases/press-release-details/2021/Starbucks-Reports-Record-Q3-Fiscal-

2021-Results/default.aspx.