Embed Size (px)
Citation preview
STARBUCKS
Starbucks Corporation (NASDAQ: SBUX) is an international coffee and coffeehouse chain based in Seattle, Washington. Starbucks is the largest coffeehouse company in the world, with 17,009 stores in 50 countries, including over 11,000 in the United States, over 1,000 in Canada, and over 700 in the United Kingdom.
Starbucks sells drip brewed coffee, espresso-based hot drinks, other hot and cold drinks, coffee beans, salads, hot and cold sandwiches and panini, pastries, snacks, and items such as mugs and tumblers. Through the Starbucks Entertainment division and Hear Music brand, the company also markets books, music, and film. Many of the company's products are seasonal or specific to the locality of the store. Starbucks-brand ice cream and coffee are also offered at grocery stores.
From Starbucks' founding in later forms in Seattle as a local coffee bean roaster and retailer, the company has expanded rapidly. In the 1990s, Starbucks was opening a new store every workday, a pace that continued into the 2000s. The first store outside the United States or Canada opened in the mid-1990s, and overseas stores now constitute almost one third of Starbucks' stores. The company planned to open a net of 900 new stores outside of the United States in 2009, but has announced 900 store closures in the United States since 2008.
Starbucks has been a target of protests on issues such as fair-trade policies, labor relations, environmental impact, political views, and anti-competitive practices.
Founding
The first Starbucks was opened in Seattle, Washington, on March 30, 1971 by three partners: English teacher Jerry Baldwin, history teacher Zev Siegl, and writer Gordon Bowker. The three were inspired by entrepreneur Alfred Peet (whom they knew personally) to sell high-quality coffee beans and equipment. The name is taken from Moby-Dick; after Pequod was rejected by one of the co-founders, the company was named for the first mate on the Pequod, Starbuck.
From 1971–1975, the first Starbucks was at 2000 Western Avenue; it then was relocated to 1912 Pike Place, where it remains to this day. During their first year of operation, they purchased green coffee beans from Peet's, then began buying directly from growers.
The Starbucks Center, Seattle. The company HQ, in the old Sears, Roebuck and Co. catalog distribution center building
Entrepreneur Howard Schultz joined the company in 1982 as Director of Retail Operations and Marketing, and after a trip to Milan, advised that the company should sell coffee and espresso drinks as well as beans. Seattle had become home to a thriving countercultural coffeehouse scene since the opening of the Last Exit on Brooklyn in 1967, the owners rejected this idea, believing that getting into the beverage business would distract the company from its primary focus. To them, coffee was something to be prepared in the home, but they did give away free samples of pre-made drinks. Certain that there was money to be made selling pre-made drinks, Schultz started the Il Giornale coffee bar chain in April 1986.
Company's profile
‡ Total stores 16,706 ( 12/ 2009) ‡ 8,850 Company-operated stores. ‡ 7,856 Licensed stores. ‡ Operating in more than 50 countries ‡ Operating income (2009)- $562 million
P roducts
‡ Coffee ‡ Handcrafted Beverages & Merchandise
‡ Fresh Food ‡ Consumer Products ‡ Brand portfolio
Sale and expansion
In 1984, the original owners of Starbucks, led by Jerry Baldwin, took the opportunity to purchase Peet's (Baldwin still works there). In 1987, they sold the Starbucks chain to Schultz's Il Giornale, which rebranded the Il Giornale outlets as Starbucks and quickly began to expand. Starbucks opened its first locations outside Seattle at Waterfront Station in Vancouver, British Columbia, and Chicago, Illinois, that same year. At the time of its initial public offering on the stock market in 1992, Starbucks had grown to 165 outlets.
Currently Starbucks is present in more than 55 countries.
The first Starbucks location outside North America opened in Tokyo, Japan, in 1996. Starbucks entered the U.K. market in 1998 with the $83 million acquisition of the then 60-outlet, UK-based Seattle Coffee Company, re-branding all the stores as Starbucks. In September 2002 Starbucks opened its first store in Latin America, in Mexico City. In August 2003 Starbucks opened its first store in South America in Lima, Peru. In November 2010, Starbucks opened the first Central American store in El Salvador's capital, San Salvador. On March 17, 2011 Starbucks opened its third restaurant in Central America and its first in Guatemala City , Guatemala.
In April 2003, Starbucks completed the purchase of Seattle's Best Coffee and Torrefazione Italia from AFC Enterprises, bringing the total number of Starbucks-operated locations worldwide to more than 6,400. On September 14, 2006, rival Diedrich Coffee announced that it would sell most of its company-owned retail stores to Starbucks. This sale includes the company-owned locations of the Oregon-based Coffee People chain. Starbucks converted the Diedrich Coffee and Coffee People locations to Starbucks, although the Portland airport Coffee People locations were excluded from the sale.
Many bookstores have Starbucks licensed stores within them, including Barnes & Noble in the United States, Chapters-Indigo in Canada
(company operated), Livraria Saraiva and Fnac in Brazil and B2S in Thailand.
The Starbucks location in the former imperial palace in Beijing closed in July 2007. The coffee shop had been a source of ongoing controversy since its opening in 2000 with protesters objecting that the presence of the American chain in this location "was trampling on Chinese culture." Also in 2007, Starbucks cancelled plans to expand into India, but opened its first store in Russia, ten years after first registering a trademark there. In 2008, Starbucks continued its expansion, settling in Argentina, Bulgaria, the Czech Republic and Portugal. In Buenos Aires, the biggest Starbucks store in Latin America was opened. In April 2009, Starbucks entered Poland. New stores will be opened in Algeria. Starbucks has also opened its doors on 5 August 2009, in Utrecht, Netherlands. On October 21, 2009 it was announced that Starbucks will finally establish in Sweden, starting with a location at Arlanda airport outside Stockholm. On June 16, 2010 Starbucks opened its first store in Budapest, Hungary.
In May 2010, Southern Sun Hotels South Africa announced that they had signed an agreement with Starbucks that would enable them to brew Starbucks coffees in select Southern Sun and Tsonga Sun hotels in South Africa. The agreement was partially reached in order for Starbucks coffees to be served in the country in time for the commencement of the 2010 FIFA World Cup hosted by South Africa.
Starbucks is planning to open its third African location, after Egypt and South Africa, in Algeria. A partnership with Algerian food company Cevital will see Starbucks open its first Algerian store in Algiers.
In February, 2011, Starbucks officially started selling their coffee in Norway, but Starbucks never opened a shop there. Instead they supply Norwegian food shops with Starbucks.
In January, 2011, Starbucks and Tata Coffee, Asia's largest coffee plantation company, announced plans for a strategic alliance to bring Starbucks to India later that year. Starbucks plans set up stores in Tata retail locations and hotels in India, and also to source and roast coffee beans at Tata Coffee's Kodagu facility.
Restaurant experiment
In 1999, Starbucks experimented with eateries in the San Francisco Bay area through a restaurant chain called Circadia. These restaurants were soon "outed" as Starbucks establishments and converted to Starbucks cafes.
Corporate governance
Howard Schultz, CEO of Starbucks
Orin C. Smith was President and CEO of Starbucks from 2001 to 2005.
Starbucks' chairman, Howard Schultz, has talked about making sure growth does not dilute the company's culture and the common goal of the company's leadership to act like a small company.
In January 2008, Chairman Howard Schultz resumed his roles as President and CEO after an eight year hiatus, replacing Jim Donald, who took the posts in 2005 but was asked to step down after sales slowed in 2007. Schultz aims to restore what he calls the "distinctive Starbucks experience" in the face of rapid expansion. Analysts believe that Schultz must determine how to contend with higher materials prices and enhanced competition from lower-price fast food chains, including McDonald's and Dunkin' Donuts. Starbucks announced it will discontinue its warm breakfast sandwich products, originally intended to launch nationwide in 2008, in order to refocus the brand on coffee, but the sandwiches were reformulated to deal with complaints and the product line stayed. On February 23, 2008, Starbucks closed its stores from 5:30-9:00 p.m. local time to train its baristas.
Howard Schultz (born July 19, 1953) is an American businessman, and entrepreneur best known as the chairman and CEO of Starbucks and a former owner of the Seattle SuperSonics. Schultz co-founded Maveron, an investment group, in 1998 with Dan Levitan.
In 2006, Forbes magazine ranked Schultz as the 354th richest person in the United States, with a net worth of $1.1 billion.
Biography
Howard Schultz was born to a Jewish family on July 19, 1953 in Brooklyn, New York, the son of ex-US Army trooper and then truck driver Fred Schultz, and his wife Elaine. With his younger sister, Ronnie, and brother, Michael, he grew up in the Canarsie Bayview Housing Projects. As Schultz's family was poor, he saw an escape in sports such as baseball, football, and basketball. He went to Canarsie High School, from which he graduated in 1971. In high school, Schultz excelled at sports and was awarded an athletic scholarship to Northern Michigan University – the first person in his family to go to college. A member of Tau Kappa Epsilon, Schultz received his bachelor's degree in Communications in 1975.
Career
After graduating, he worked as a salesperson for Xerox Corporation. In 1979 he became a general manager for Swedish drip coffee maker manufacturer, Hammarplast. In 1981, Schultz visited a client of Hammarplast, a fledgeling coffee-bean shop called Starbucks Coffee Company in Seattle where he joined as the Director of Marketing a year later. On a buying trip to Milan, Italy for Starbucks, Schultz noted that coffee bars existed on practically every street. He learned that they not only served excellent espresso, they also served as meeting places or public squares; they were a big part of Italy's societal glue, and there were 200,000 of them in the country.
On his return, he tried to persuade the owners (including Jerry Baldwin) to offer traditional espresso beverages in addition to the whole bean coffee, leaf teas and spices they had long offered. After a successful pilot of the cafe concept, the owners refused to roll it out company-wide, saying they didn't want to get into the restaurant business. Frustrated, Schultz started his own coffee shop named 'Il Giornale' (after a newspaper in Milan) in 1985. Two years later, the original Starbucks management decided to focus on Peet's Coffee & Tea and sold its Starbucks retail unit to Schultz and Il Giornale for $3.8 million.
Schultz renamed Il Giornale with the Starbucks name and aggressively expanded Starbucks' reach across the United States. Schultz's keen insight in real estate and his hard-line focus on growth drove him to expand the company rapidly. Schultz didn't believe in franchising, so he made a point of having Starbucks own every domestic outlet with one exception. Schultz also went 50-50 with Magic Johnson on stores in minority communities. Schultz is also a significant stakeholder in Jamba Juice.
On January 8, 2008 Schultz regained his status as CEO of Starbucks after a hiatus of 8 years. While CEO of Starbucks in 2008, Schultz earned a total compensation of $9,740,471, which included a base salary of $1,190,000, and options granted of $7,786,105.
Sports
Schultz is the former owner of the NBA's Seattle SuperSonics. During his tenure as team owner, he was criticized for his naivete and propensity to run the franchise like a business instead of a sports team. Schultz was known for wearing his emotions on a heartstring and was often spotted at games slouching in his chair when the team was not doing well. He also feuded with big name star Gary Payton, feeling that Payton disrespected
him and the team by not showing up to the first day of training camp in 2002.
On July 17, 2006, it was announced that Schultz sold the team to a group of businessmen from Oklahoma City for $350 million. It was speculated that the new owners would move the team to their city some time after the 2006-2007 NBA season. On July 3, 2008, the City of Seattle reached a settlement with the new ownership group and the Sonics did, in fact, move to Oklahoma City. The sale to the out-of-state owners considerably damaged Schultz' popularity in Seattle. In a local newspaper poll, Schultz was judged "most responsible" for the team leaving the city, winning 42% of the vote. Howard Schultz filed a lawsuit against Sonics chairman Clay Bennett, in April 2008, to rescind the July 2006 sale based on fraud and intentional misrepresentation. However, Schultz dropped the lawsuit in August 2008. When Bennett purchased the Sonics and its sister franchise in the WNBA, the Seattle Storm, for $350 million, he agreed to a stipulation that he would make a "good-faith best effort" for 1 year to keep both teams in Seattle. He has since sold the Storm to four Seattle women who will keep the team in Seattle.
Comments about the UK economy
Schultz said to CNBC in February 2009 about his concerns on the economy that "the place that concerns us the most is western Europe, and specifically the UK. The UK is in a spiral." He added that his main concerns were "Unemployment, the sub-prime mortgage crisis, particularly in the UK, and consumer confidence, particularly in the UK, is very, very poor."
Lord Mandelson, the then-UK Business Secretary, responded saying Britain was "not spiralling, although I've noticed Starbucks is in a great deal of trouble - but that might be because of their over-expansion, given the state of the market." Mandelson was later overheard at a drinks reception, saying: "Why should I have this guy running down the country? Who is he? How the hell are [Starbucks] doing?"
An official comment from Starbucks read that "It is a difficult economic situation in the US and around the world. Please be assured that Starbucks has no intention of criticising the economic situation in the UK. We are all in this together and as a global business we are committed to each and every market we serve."
Awards
In 1998, Schultz was awarded the "The Israel 50th Anniversary Tribute Award" from the Jerusalem Fund of Aish Ha-Torah for "playing a key role in promoting a close alliance between the United States and Israel".
In 1999, Schultz was awarded the "National Leadership Award" for philanthropic and educational efforts to battle AIDS.
The recipient of the 2004 International Distinguished Entrepreneur Award, presented to him from the University of Manitoba for his outstanding success and commendable conduct of Starbucks.
In 2007 he received the FIRST Responsible Capitalism Award.
On March 29, 2007, Schultz accepted the Rev. Theodore M. Hesburgh, C.S.C., Award for Ethics in Business at the Mendoza College of Business at the University of Notre Dame. The same night, he delivered the Frank Cahill Lecture in Business Ethics.
SWOT Analysis Starbucks
Strengths. Starbucks Corporation is a very profitable organization, earning in
excess of $600 million in 2004.The company generated revenue of more than $5000 million in the same year.
It is a global coffee brand built upon a reputation for fine products and services. It has almost 9000 cafes in almost 40 countries.
Starbucks was one of the Fortune Top 100 Companies to Work For in 2005. The company is a respected employer that values its workforce.
The organization has strong ethical values and an ethical mission statement as follows, 'Starbucks is committed to a role of environmental leadership in all facets of our business.'
Weaknesses. Starbucks has a reputation for new product development and
creativity. However, they remain vulnerable to the possibility that their innovation may falter over time.
The organization has a strong presence in the United States of America with more than three quarters of their cafes located in the home market. It is often argued that they need to look for a portfolio of countries, in order to spread business risk.
The organization is dependant on a main competitive advantage, the retail of coffee. This could make them slow to diversify into other sectors should the need arise.
Opportunities. Starbucks are very good at taking advantage of opportunties. In
2004 the company created a CD-burning service in their Santa Monica (California USA) cafe with Hewlett Packard, where customers create their own music CD.
New products and services that can be retailed in their cafes, such as Fair Trade products.
The company has the opportunity to expand its global operations. New markets for coffee such as India and the Pacific Rim nations are beginning to emerge.
Co-branding with other manufacturers of food and drink, and brand franchising to manufacturers of other goods and services both have potential.
Threats. Who knows if the market for coffee will grow and stay in favour
with customers, or whether another type of beverage or leisure activity will replace coffee in the future?
Starbucks are exposed to rises in the cost of coffee and dairy products.
Since its conception in Pike Place Market, Seattle in 1971, Starbucks' success has lead to the market entry of many competitors and copy cat brands that pose potential threats.
Store closures
In 2003 Starbucks closed all six of its locations in Israel, citing "on-going operational challenges" and a "difficult business environment."
On July 1, 2008, the company announced it was closing 600 underperforming company-owned stores and cutting U.S. expansion plans amid growing economic uncertainty. On July 29, 2008, Starbucks also cut almost 1,000 non-retail jobs as part of its bid to reenergize the brand and boost its profit. Of the new cuts, 550 of the positions were layoffs and the rest were unfilled jobs. These closings and layoffs effectively ended the company’s period of growth and expansion that began in the mid-1990s.
Starbucks also announced in July 2008 that it would close 61 of its 84 stores in Australia by August 3, 2008. Nick Wailes, an expert in strategic
management of the University of Sydney, commented that "Starbucks failed to truly understand Australia’s cafe culture."
On January 28, 2009, Starbucks announced the closure of an additional 300 underperforming stores and the elimination of 7,000 positions. CEO Howard Schultz also announced that he had received board approval to reduce his salary. Altogether, from February 2008 to January 2009, Starbucks terminated an estimated 18,400 U.S. jobs and began closing 977 stores worldwide.
In August 2009, Ahold announced closures and rebranding for 43 of their licensed store Starbucks kiosks for their US based Stop & Shop and Giant supermarkets. However, Ahold has not yet abandoned the licensed Starbucks concept; they plan to open 5 new licensed stores by the end of 2009.
2009 New York City bombing
At approximately 3:30 a.m. on May 25, 2009, a Starbucks store on the Upper East Side in the Manhattan borough of New York City, New York, was bombed. A small improvised explosive device was used and damage was limited to exterior windows and a sidewalk bench; there were no injuries. Residents of apartments above the bombing site were briefly evacuated. Police believed at first that the bombing might be related to a serial bomber operating in Manhattan, because it was similar in nature to earlier bombings in Manhattan at the British and Mexican consulates, as well as a U.S. military-recruiting center in Times Square. However, a 17-year-old boy was arrested that July after boasting that he bombed the store to emulate the movie Fight Club.
Criticism and controversy
Two Starbucks stores in one shopping center in Queens, New York
Market strategy
Some of the methods Starbucks has used to expand and maintain their dominant market position, including buying out competitors' leases, intentionally operating at a loss, and clustering several locations in a small geographical area (i.e., saturating the market), have been labeled anti-competitive by critics. For example, Starbucks fueled its initial expansion into the UK market with a buyout of Seattle Coffee Company, but then used its capital and influence to obtain prime locations, some of which operated at a financial loss. Critics claimed this was an unfair attempt to drive out small, independent competitors, who could not afford to pay inflated prices for premium real estate. In the 2000s, Starbucks greatly increased its "licensed store" system, which permits Starbucks licenses only if they contribute to less than 20% of the licensee's gross income, are inside other stores or in limited or restricted access spaces, as to not dilute the brand image. License agreements are rare in volume and usually only made with Fortune 1000 or similar sized chain stores. The licensed store system can create the illusion of 2 or more Starbucks cafes in the same shopping plaza, when one is a standalone company owned, and the others are licensed. The menus of licensed stores can be the same or trimmed or modified versions of the cafes, or be positioned as independent cafes that happen to sell Starbucks products (ex. Barnes & Noble).
Labor disputes
The Reverend Billy leading an anti-Starbucks protest in Austin, Texas in 2007
Starbucks workers in seven stores have joined the Industrial Workers of the World (IWW) as the Starbucks Workers Union since 2004.
According to a Starbucks Union press release, since then the union membership has begun expanding to Chicago and Maryland in addition to New York City, where the movement originated. On March 7, 2006, the IWW and Starbucks agreed to a National Labor Relations Board settlement in which three Starbucks workers were granted almost US$2,000 in back wages and two fired employees were offered reinstatement. According to the Starbucks Union, on November 24, 2006, IWW members picketed Starbucks locations in more than 50 cities around the world in countries including Australia, Canada, Germany, and the UK, as well as U.S. cities including New York, Chicago, Minneapolis and San Francisco, to protest the firing of five Starbucks Workers Union organizers by Starbucks and to demand their reinstatement.
Some Starbucks baristas in Canada, Australia and New Zealand, and the United States belong to a variety of unions.
In 2005, Starbucks paid out US$165,000 to eight employees at its Kent, Washington, roasting plant to settle charges that they had been retaliated against for being pro-union. At the time, the plant workers were represented by the International Union of Operating Engineers. Starbucks admitted no wrongdoing in the settlement.
A Starbucks strike occurred in Auckland, New Zealand, on November 23, 2005. Organized by Unite Union, workers sought secure hours, a
minimum wage of NZ$12 an hour, and the abolition of youth rates. The company settled with the Union in 2006, resulting in pay increases, increased security of hours, and an improvement in youth rates.
Anti-Starbucks demonstration in Beirut, Lebanon
In March 2008, Starbucks was ordered to pay baristas over US$100 million in back tips in a Californian class action lawsuit launched by baristas alleging that granting shift-supervisors a portion of tips violates state labor laws. The company plans to appeal. Similarly, an 18 year-old barista in Chestnut Hill, MA has filed another suit with regards to the tipping policy. Massachusetts’s law also states that managers may not get a cut of tips. A similar lawsuit was also filed in Minnesota on March 27, 2008.
Opening without planning permission
Starbucks has been accused by local authorities of opening several stores in the United Kingdom in retail premises, without the planning permission for a change of use to a restaurant. Starbucks has argued that "Under current planning law, there is no official classification of coffee shops. Starbucks therefore encounters the difficult scenario whereby local authorities interpret the guidance in different ways. In some instances, coffee shops operate under A1 permission, some as mixed use A1/A3 and some as A3".
In May 2008, a branch of Starbucks was completed on St. James's Street in Kemptown, Brighton, England, despite having been refused permission by the local planning authority, Brighton and Hove City Council, who claimed there were too many coffee shops already present on the street. Starbucks appealed the decision by claiming it was a retail store selling bags of coffee, mugs and sandwiches, gaining a six month extension, but the council ordered Starbucks to remove all tables and chairs from the
premises, to comply with planning regulations for a retail shop. 2500 residents signed a petition against the store, but after a public inquiry in June 2009 a government inspector gave permission for the store to remain.
A Starbucks in Hertford won its appeal in April 2009 after being open for over a year without planning permission. Two stores in Edinburgh, one in Manchester, one in Cardiff, one in Pinner and Harrow, were also opened without planning permission. The Pinner cafe, opened in 2007, won an appeal to stay open in 2010. One in Blackheath, Lewishamwas also under investigation in 2002 for breach of its licence, operating as a restaurant when it only had a licence for four seats and was limited to take away options. There was a considerable backlash from members of the local community who opposed any large chains opening in what is a conservation area. To this date, 8 years after the court case, the Starbucks is still operating as a takeaway outlet.
Alleged relationship with the Israeli military
There have been calls for boycott of Starbucks stores and products because it is alleged that Starbucks sends part of its profits to the Israeli military. This charge is leveled due to the fact that the President, Chairman and CEO of Starbucks Howard Schultz is Jewish. It has been long alleged that Schultz is "an active Zionist" and is a recipient of several Israeli awards including "The Israel 50th Anniversary Tribute Award" for "playing a key role in promoting a close alliance between the United States and Israel." In response to these allegations Starbucks issued a statement saying “Neither Chairman Howard Schultz nor Starbucks fund or support the Israeli Army. Starbucks is a non-political organization and does not support individual political causes.” Starbucks has been a regular target of activists protesting against the Israeli intervention in Gaza. Starbucks was forced to close a store in Beirut, Lebanon because of demonstrators shouting anti-Israel slogans and causing customers to flee. Protesters in Beirut told the Associated Press that they targeted Starbucks because they claim Chairman and CEO Howard Schultz donates money to the Israeli military. They hung several banners on the shop's window and used white tape to paste a Star of David over the green-and-white Starbucks sign. They also distributed a letter saying Schultz "is one of the pillars of the American Jewish lobby and the owner of the Starbucks," which they said donates money to the Israeli military. Starbucks responded by saying "Rumors that Starbucks Coffee Company and its management support Israel are unequivocally false. ... Starbucks is a nonpolitical organization and does not support
political causes. Further, political preferences of a Starbucks partner [employee] at any level have absolutely no bearing on Starbucks company policies."
Violence against Starbucks in Canada and the United Kingdom
A store on Piccadilly with its windows boarded up after being smashed by protesters
A damaged front window of a Starbucks coffee shop in Toronto
On January 12, 2009, a Starbucks in Whitechapel Road in London was the target of vandalism by pro-Palestinian demonstrators who broke windows and reportedly ripped out fittings and equipment after clashes with riot police. In the early hours of the following morning a suspected makeshift firebomb was hurled into the premises, causing further damage.
On January 17, 2009, a pro-Gaza protest was held by the Stop the War Coalition in Trafalgar Square in central London. After the rally, two groups of people, some hiding their faces, smashed and looted two
Starbucks on Piccadilly and Shaftesbury Avenue. Although the stores had requested greater police protection following the violence against a Starbucks the previous week, Scotland Yard stated it could "not stop thugs hell-bent on causing damage."
On 26 June 2010, during the 2010 G-20 Toronto summit protests, a Starbucks window was smashed, as well as other stores, by a "black bloc group". A supposed member, when asked why by a CBC radio reporter, cited Starbucks' support for Israel as being the reason.
Partnership with Apple
Starbucks has agreed to a partnership with Apple to collaborate on selling music as part of the "coffeehouse experience". In October 2006, Apple added a Starbucks Entertainment area to the iTunes Store, selling music similar to that played in Starbucks stores. In September 2007 Apple announced that customers would be able to browse the iTunes Store at Starbucks via Wi-Fi in the US (with no requirement to login to the Wi-Fi network), targeted at iPhone, iPod touch, and MacBook users. The iTunes Store will automatically detect recent songs playing in a Starbucks and offer users the opportunity to download the tracks. Some stores feature LCD screens with the artist name, song, and album information of the current song playing. This feature has been rolled out in Seattle, New York City, and the San Francisco Bay Area, and was offered in limited markets during 2007–2008. During the fall of 2007, Starbucks also began to sell digital downloads of certain albums through iTunes. Starbucks gave away 37 different songs for free download through iTunes as part of the "Song of the Day" promotion in 2007, and a "Pick of the Week" card is now available at Starbucks for a free song download. A Starbucks app is available in the iPhone App Store.
STARBUCKS MARKET SHARE AND MEDIA SPEND
We all know Starbucks spends very little on advertising. But this chart showing market share and media spend numbers for the Top 10 Restaurant Chains is startling. Just compare the media spend of the other restaurants to Starbucks.
Financials
Period Ending Oct 3, 2010Sep 27, 2009
Sep 28, 2008
Total Revenue 10,707,400
9,774,600 10,383,000
Cost of Revenue 4,458,600 4,324,900 4,645,300
Gross Profit 6,248,800 5,449,700 5,737,700
Operating Expenses
Research Development - - -
Selling General and Administrative
4,414,100 4,142,500 4,531,200
Non Recurring 53,000 332,400 153,300
Others 510,400 534,700 549,300
Total Operating Expenses - - -
Operating Income or Loss 1,419,400 562,000 503,900
Income from Continuing Operations
Total Other Income/Expenses Net
50,300 37,000 9,000
Earnings Before Interest And Taxes
1,469,700 599,000 512,900
Interest Expense 32,700 39,100 53,400
Income Before Tax 1,437,000 559,900 459,500
Income Tax Expense 488,700 168,400 144,000
Minority Interest (2,700) (700) -
Net Income From Continuing Ops
1,093,700 512,700 315,500
Non-recurring Events
Discontinued Operations - - -
Extraordinary Items - - -
Effect Of Accounting Changes
- - -
Other Items - - -
Net Income 945,600 390,800 315,500
Preferred Stock And Other Adjustments
- - -
Net Income Applicable To Common Shares
945,600 390,800 315,500
Currency in USD.
***
Starbucks Coffee Company Received 2005 World Environment Center Gold Medal for International Corporate Achievement in Sustainable Development
Washington, D.C., January 27, 2005 – The World Environment Center (WEC) has selected Starbucks Coffee Company (Nasdaq: SBUX) to receive its 21st Annual Gold Medal for International Corporate Achievement in Sustainable Development for international leadership in sustainable development within the specialty coffee industry. This leadership is clearly demonstrated in the company’s development of Coffee and Farmer Equity (C.A.F.E.) Practices, a set of environmentally, socially and economically responsible coffee buying guidelines created in conjunction with Conservation International that are designed to contribute positively to the livelihoods of coffee farmers while placing an emphasis on environmental conservation and supply chain transparency.
The environmental Impact
‡ Starbucks makes charitable contributions through the Starbucks Foundation created in 1997 ‡ In 1999, Starbucks started "Grounds for your Garden" to make their business more environmentally-friendly ‡ In 2004, Starbucks began reducing the size of their paper napkins and store garbage bags ‡ In 2008, Starbucks was ranked #15 on the U.S. Environmental Protection Agency's list of Top 25 Green Power Partners for purchases of renewable energy.
Starbucks Shared Planet ‡ Ethical sourcing‡ Environmental stewardship ‡ Community involment
Achievements and initiatives 2009 ‡ 81% of purchased coffee- C.A.F.E. practices ‡ Increase of FAIR Trade coffee by 100% ‡ Farmers loans $20 mil. by 2015 ‡ Community service 1mil. hours by 2015 ‡ Conservation International - 29 projects
Achievements and initiatives 2009 ‡ LEED certification for new stores in 2010 ‡ Develop a recyclable cup solution by 2012 ‡ Front-of-store recycling in stores by 2015 ‡ Serve 25% of beverages in reusable serveware or tumblers by 2015 Starbucks are not recyclable ‡ Starbucks gives customers a 10-cent discount when they bring their own reusable cup ‡ By 2009 reusable cups had been served over 4.4 million more than 2008
Competitor analysis
Starbucks Competitors
Starbucks' marketing strategy involved positioning its Starbucks outlets as a place where consumers can spend time other than their home or work. This was done by making each of its stores as comfortable and relaxing as possible. The coffee giant achieved these using creature comforts, such as comfortable furniture and relaxing music. Over the past several years, Starbucks also included offerings such as wireless internet, handicapped access, complimentary books, and common areas for collaboration. While Starbucks stores are positioned as locations where customers can spend time in a comfortable setting, their product lines are positioned at the higher end in regards to prices and quality.
Starbucks competitors in the coffee beverage sales include 7-Eleven, Dunkin Donuts, BIGGBY Coffee, Caribou Coffee, McDonald's, Panera Bread, and Einstein Bagels. Competitors such as McDonald's and Dunkin Donuts not only have extensive menus, but also the financial resources and position to leverage their strengths to threaten Starbucks profitability.
In terms of perception, 7-Eleven and Dunkin Donuts provide coffee in a "no-nonsense fashion", which attracts customers who are extremely price sensitive. Caribou Coffee's environment is similar to that of Starbucks because of furniture, free internet, and cozy surroundings, but their lack of market expansion has prohibited them from gaining the notoriety Starbucks has achieved. Finally, BIGGBY Coffee is in the middle ground where the likes of Dunkin Donuts and Caribou Coffee separate themselves.
Perceptual Map of Starbucks And It's Competitors (Coffee Shop Market)
The graph below illustrates customer perceptions regarding various brands:
Starbucks Corporation Patent applications
Patent application number
Title
20110088560
Machine for Brewing a Beverage Such as Coffee and Related Method - A machine for brewing a beverage such as coffee includes a chamber and a piston disposed in the chamber. The piston is operable to move to a first position to allow the chamber to receive a liquid and a flavor base such as ground coffee, to remain in the first position for a time sufficient for the beverage to brew, and to move to a second position to dispense the beverage by forcing the beverage out of the chamber. By modifying some or all steps of the French press brewing technique, the machine can typically control coffee-brewing parameters with a level of precision that yields brewed coffee having a uniform taste from cup to cup, and can typically brew the coffee with a speed that renders the machine suitable for use by establishments that serve significant amounts of coffee.
20100154645
Method for brewing a beverage such as coffee and related method - An embodiment of a machine for brewing a beverage such as coffee includes a chamber and a piston assembly disposed in the chamber. The chamber is operable to receive a liquid such as water and a flavor base such as ground coffee, and to allow the beverage to brew from a mixture of the liquid and the base. The piston assembly is operable to filter a solid such as spent coffee grounds from the brewed beverage by moving in a first direction, and to force the filtered beverage out of the chamber by moving in a second direction. By modifying or automating some or all steps of the French press brewing technique, such a machine may control one or more of the brewing parameters with a level of precision that yields brewed coffee having a uniform taste from cup to cup. Furthermore, such a machine may brew the coffee with a speed that renders the machine suitable for use by establishments that serve significant amounts of coffee.
20080317924 Beverage and Method of Making Same - The present embodiments are directed to beverages such as ready-to-drink coffee and tea beverages. A beverage in accordance with the embodiments described herein includes at least two discrete, preprepared and packaged components. In some embodiments, one of the components is a coffee or tea base, and another component is a dairy or soy base. During final processing,
the two or more discrete bases are combined together with water and packaged for sale as a ready-to-drink beverage.
