STARBUCKS

 They have nearly 30,000 cafes (29,324) across the globe Starbucks has become more than just a
household name from its iconic cups.
 It has catapulted from one coffee bean shop in Seattle to a $80B business over last 47 years.
 Starbucks sales account for 57% of the total café market, nearly 2/3 of coffee sold at cafes in USA comes
from Starbucks.
 There are more than 14,000 locations in USA alone.
 Having too many stores have led to fewer transactions at individual stores, to compensate the company
has raise prices.

(History)

 In 1970 3 college friends decided to get into coffee business, they found a mentor Alfred Pete the founder
of Pete’s coffee and the man was responsible for bringing custom coffee roasting to the US, he knew the
coffee industry inside and out especially the gourmet and he was the most educated coffee guy in the
country at the time.
 So with Pete’s help the 3 friends opened Starbucks a coffee bean and roastry at Seattle’s famous pipe
place market in 1971.
 Pete provided the young entrepreneur’s with coffee beans and connected them with coffee brokers until
they could set up their own roastery and source their own beans.
 For the first decade they opened 5 more locations in Seattle, until 1980 no consumers were that into a
coffee beverage at a Starbucks as in 1970s they instead take coffee beans home.
 Starbucks initial focus was bringing high quality beans to customers who are more costumed to instant or
canned coffee but that changed with the addition of one man, the company hired its first professional
director of marketing and sales and he was Howard Schultz, in 1983 Howard travels to Italy and returns
with an idea of turning the coffee bean stores into cafes, Starbucks served its first latte the next year the
experiment was a success and 4 years later Schultz partnered with investors and bought Starbucks for
$3.8M.
 By the time the company went public in 1992 it had 165 stores by 1996 they opened more than 1000
locations including its first international cafes in Japan and Singapore.
 Growth was so rapid that 3 years later Starbucks opened its 2000 th location. Between 2000 and 2007 the
no of cafes quadruples from 3501 to 15,011, during the period the company opened an average of 1,500
stores every year including 2,571 in 2007 alone(Sales shot up from $2B TO $9.4B)

Financial crash

 In 2007 the financial crash screeched its rapid growth and its stock prices plummeted by 50%
 They brought back Schultz, he handled the situation he made the store with experiences and not just a
place to get a quick coffee they stopped breakfast sandwiches and brought back in-house grinding
infusing the cafes once again with that fresh coffee aroma, he even mandated the removal of automated
expressive sheets these even made the services faster but removed much of the romance and theater of
baristas each cup of coffee opened 300 stores in 2008 and 600 in 2009, a month after his return the stock
prices rose by 143% in 2009.
 By 2017 Starbucks opened to 2,945nmore locations ending the year with 28,039 cafes around the world.

After 2017

 However it brings us back to the first problem Profit cannibalization

  Oversaturation particularly in Urban locations has spread sales thin because Starbucks, so even though
the company sale are growing the individual aren’t growing at a faster pace, to overcome the problem the
company announced a closure of 150 stores in 2018.
 Starbucks opened its first roaster in Shanghai which is more into tourists which made them $64,000 daily
which is double that a café would make for a week. The company opened 4 roastery so far with plans for
2 more.
 Those are the high end experiences the customers are looking for.

Numerical facts

 No of stores- nearly 30,000

 No of employees- 349,000 by sep 2020
 Annual sales-$19.16B reflecting a 27.7% drop
 Profit- $26.5B in 2019
 Rank in global brands- Industry-1st, Global 31 under Brand finance global 500