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Starbucks Business Plan Sample

Published Jan.12, 2022

Updated Apr.24, 2024

By: Jakub Babkins

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Table of Content

Do you want to start Starbucks business plan?

Do you want to know “How was Starbucks created?“ If you are thinking of starting a coffee business or any other business, it is a great idea to study the business plan for Starbucks.

Studying the starbucks coffee business plan s created by professional business plans writers can be a great way to understand the complexities involved in planning out a business. Though you can study other business plans like business plan for seafood restaurant for reference, however, it is always a good idea to pay attention to successful businesses as well.

In this template, we will be explaining the details of Starbucks business plan and the components that should be a part of every good starbucks coffee business plan .

Executive Summary

2.1 the business.

Starbucks was started as a coffee bean store by Jerry Baldwin, Gordon Bowker and Zev Siegi in 1971. The business was then converted to a coffee shop which over the years gained significant attention and expansion across the United States. The main aim of the business is to offer a wide variety of products ranging from different types of drinks and food to merchandise like mugs and tumblers etc.

2.2 Management of Starbucks Company

To manage a business efficiently, you need to develop a strong business plan. A good Starbucks coffee business plan helps a company to manage its technical and financial resources and it contains all the details related to a business.

Starbucks franchise business plan contains all the details regarding Starbucks. For instance, it contains information about Starbucks strategic planning process or about how many franchises does Starbucks have etc.

When writing a starbucks coffee business plan , you can get assistance from this document that contains Starbucks market development details or a separate plan like business plan for a Mexican restaurant . Otherwise, you can also choose the route of using business consulting services for help in developing a business plan.

2.3 Customers of Starbucks Company

Considering the fame of the business, the customers of Starbucks belong to many different domains and age groups. However, the targeted customers of the company include:

• Adults between 25-40
• Young Adults in the age group 18-25
• Generation Y
• Affluent People

2.4 Business Target

The target of Starbucks according to their mission statement is to “inspire and nurture the human spirit – one person, one cup and one neighbourhood at a time”.

The financial targets that Starbucks wants to achieve in the next 2 years are given below:

Company Summary

3.1 company owner.

Kevin Johnson is the owner of Starbucks. He completed his Bachelor’s in Business Administration from the New Mexico State University. He joined Starbucks as a member of the board of directors and then made his way up through COO to the company’s CEO and president.

3.2 Why the Starbucks company is being expanded

As a COO, Kevin handled the company’s operation throughout the world spanning different geographical locations. He also assisted with supply chain, HR, technology and marketing for the company on all platforms. Due to his outstanding ideas and management, he assumed the position of CEO intending to scale the business when his predecessor retired.

3.3 How the Starbucks company will be started

Step1: Plan Everything

The first step of starting any business is to plan thoroughly. The planning of Starbucks was done through Starbuck’s business plan. A Starbucks coffee business plan tells not only what type of company is Starbucks but also answers questions like how long Starbucks has been in business. Every business plan contains base information like this whether it is for a coffee shop or a BBQ restaurant business plan template . So If you want to write a starbucks coffee business plan for a commercial business like a business plan for Subway franchise , you can refer to this plan.

Step2: Define the Brand

The next step is to advertise your additions and benefits to attract your target market. You can achieve this by developing a marketing plan that shows you management like strategic management Starbucks portion in the starbucks coffee business plan .

Step3: Establish Your Corporate Office

Kevin has decided to launch more branches across the US. Therefore, he talked to managers of different regions to get the work started. Next, he will assign the provision of inventory to the new branches to the COO.

Step4: Establish a Web Presence

Internet is a business’s best and worst friend. And Kevin knew that it is all about how you present yourself. To reach a wider audience with the new branches, Kevin decided to focus the main page of the Starbucks website on the expansion efforts.

Step5: Promote and Market

The final step of starting or expanding the business is to efficiently spread the word around through a marketing plan.

The first thing you need to decide when starting or expanding a business is the services you will provide your customers. Starbucks business plans contain this information. They also contain other pertinent analyses like Starbucks company analysis and Starbucks competition analysis. These components of a starbucks coffee business plan allow you to manage different strategies of the company. For instance, the business plan for Starbucks allows the company to figure out Starbucks corporate strategy.

Even though the starbucks coffee business plan for the expansion of the Starbucks chain might be a bit different from the business plan for a new company, you can still use this business plan of Starbucks coffee for reference.

The services that will be offered by the new branches will be:

• Hot Beverages

Starbucks was started, first and foremost, as a coffee place. Therefore, the biggest product of Starbucks is hot beverages, primarily coffees in different sizes and flavours. Some of these include:

• Hot Coffees
• Cold Beverages

Some of the most famous products of Starbucks are cold beverages like:

• Cold Coffees
• Frappuccino Blended Beverages
• Cold Drinks

Therefore, these will be some of the essential products in the new branches as well.

• At-Home Coffee

When Starbucks was started, its primary goal was to sell packaged coffees of different flavours to customers. Keeping up with that tradition, the new branches will contain packaged coffee as well that people can buy.

• Food Services

One of the relatively newer features of Starbucks is its food services. The new branches will offer food groups like:

• Hot Breakfast
• Bakery Items
• Snacks & Sweets
• Oatmeal and Yogurt
• Merchandise

Like the current branches of Starbucks, the new additions will also sell Starbucks related merchandise like:

• Water Bottles

Marketing Analysis of Starbucks Company

Starting a business of any kind will require you to know and understand the target market. You should be able to analyze the past, present and future trends of the market. This knowledge, along with your financial goals will allow you to set prices for your products and services that benefit you in the long term.

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You can study the marketing plan of Starbucks pdf and Starbucks growth strategy to understand these nuances. You can also take help from other business plans like cat café business plan to see how these concepts work with newer businesses.

However, if you aim to start a coffee brand like Starbucks, you should take a look at business plan for Starbucks and study the Starbucks corporate plan.

If you don’t know how to carry out marketing analysis and set prices for your products, read through the Starbucks franchise model presented in the business plan Starbucks coffee shops.

In the following part of Starbuck’s business proposal, we have detailed the market trends and potential customers of the new branches.

5.1 Market Trends

According to Statista, the coffeehouse industry carries a market share of $36 billion out of which Starbucks revenue worldwide amounts to $24.61 billion. The coffee house industry has a growth rate of 3% per year which means that there is a steady demand for more branches of the famous coffee house. Therefore, you can’t go wrong with an expansion.

5.2 Marketing Segmentation

The potential customers of Pro Cleaning Services are divided into the following groups:

Business plan for investors

5.2.1 adults between 25-40.

The primary customers of new Starbucks branches will be the adults of the surrounding areas with an age range of 25-40. These are expected to be our regular customers as they belong to the working class and require a caffeine boost daily.

5.2.2 Young Adults in the Age Group 18-25

Our second target customers will be the young adults enrolled in schools and requiring coffee regularly. We expect them to visit the stores almost regularly.

5.2.3 Generation Y

This will be our third target group of customers. These are the people who saw Starbucks become what it is today. And we expect them as returning customers.

5.2.4 Business Workers

Lastly, the final customer group will be wealthy and affluent who buy Starbucks regularly on the go. These may include business people and people with their sources of earning.

5.3 Business Target

• To continue its status as the biggest coffeehouse chain in the world
• To maintain service standards
• To maintain customer satisfaction above 95%
• To earn a net revenue of $120k/month in each branch

5.4 Product Pricing

Due to its flagship and custom drinks, the price of Starbucks products will be a bit higher as compared to its competitors. However, it will be offering more options and quality at that price.

Marketing Strategy

To gain attention amongst so much competition, your business plan for cafe should highlight your competitive advantages over other cafes in the market. You will also need to develop a good strategy like Starbucks strategy plan to market your products.

In this business plan of Starbucks, we are highlighting the Starbucks corporate strategy that makes Starbucks stand out amongst its competitors in the market. You can follow along to develop the marketing plan that can make you stand out.

6.1 Competitive Analysis

• Starbucks has excellent customer care service
• Through the Starbucks website and user-friendly mobile app, our customers can order drinks and utilize many different offers.
• Starbucks doesn’t compromise on quality and thus provides the best quality products
• Starbucks constantly innovates its drinks and adds new menu items

6.2 Sales Strategy

• We’ll advertise our services through Google Local ads service, our website and social media.
• We’ll offer a 50% discount to the first 50 customers.
• We’ll offer a 25% discount on our new drinks for a week.

6.3 Sales Monthly

6.4 Sales Yearly

6.5 Sales Forecast

Personnel plan

Starbucks doesn’t compromise on the quality of its services therefore Starbucks corporate plan contains strict guidelines about the behaviour of the workforce and the expectations associated with them. These criteria are a part of the Starbuck Strategic plan. You can follow this Starbucks business plan pdf to get a hint into what your personnel plan should include.

7.1 Company Staff

• 1 Manager in each branch to help in overall operations
• 2 CIMS Certified Commercial Cleaners for each branch
• 2 Technician to upkeep the machinery across all branches
• 1 Web Developer/ Mobile App Developer to manage online sites
• 2 Sales Executives to organize and promote sales
• 1 Accountant
• 5 Delivery People
• 3 Receptionists at each branch

Financial Plan

If you do a financial analysis of Starbucks case study, you will understand that it takes a lot more than a good number of sales to make your business profitable. Starbucks financial strategy ensures that all the resources are being utilized efficiently so that the company doesn’t end up wasting money and going bankrupt. The Starbucks coffee business plan also carries out an analysis to figure out the prices of different items to keep the company accessible to customers and successful.

Here we’re providing the detailed financial plan made for Starbucks. So that you can get an idea of how to manage business finances.

8.1 Important Assumptions

8.2 break-even analysis.

8.3 Projected Profit and Loss

8.3.1 profit monthly.

8.3.2 Profit Yearly

8.3.3 Gross Margin Monthly

8.3.4 Gross Margin Yearly

8.4 Projected Cash Flow

1. What is the business plan of Starbucks?

Business plan Starbucks coffee shops details the different management aspects that go into starting a business. You can take a look at the Starbucks original business plan to get an idea of how the company management was planned in the beginning.

2. How much does it cost to start a Starbucks business?

Depending on the scale and nature of your business, it requires different costs to start a business. You can look at the above project report on Starbucks to understand how much costs are involved in opening chain stores. You can also take a look that theStarbucks marketing strategy pdf to make your business successful.

Download Starbucks Business Plan Sample in pdf

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Understanding Starbucks’ Business Strategy

Founded in 1971 in Seattle, WA, Starbucks Corporation is a world-renowned company specialising in the roasting, marketing, and retailing speciality coffee. With a workforce of approximately 402,000 employees in 2023, Starbucks operates 35,711 stores in 76 countries.

Their exceptional product mix comprises premium-quality coffees, teas, freshly-made food items, and a range of other beverages crafted and roasted by hand. The company also licenses its trademarks and offers a variety of coffee and tea products through other channels, such as grocery stores and national food service accounts.

Starbucks markets its product mix under various brand names, including Tazo, Teavana, Seattle’s Best Coffee, Starbucks VIA, Starbucks Refreshers, Evolution Fresh, La Boulange, and Verismo. And as of the 2023 report, Starbucks has generated a total revenue of $26.51 billion in 2022.

In addition, Starbucks’ business strategy has played a significant role in establishing its reputation as a premier coffee tradition worldwide. Though the business strategy of Starbucks is simple, it is grounded in principles, which has contributed to its success.

The Starbucks’ Business

Starbucks, a premier roaster, marketer, and retailer of speciality coffee we know today, was founded in 1971 in Seattle’s Pike Place Market.

Howard Schultz, who joined Starbucks as a Director of retail operations and marketing in 1982, began providing coffee to fine restaurants and espresso bars. Once, when Schultz travelled to Italy, he was inspired by the popularity of espresso bars in Milan and recognised the potential to develop a similar coffeehouse culture in Seattle. He convinced the founders of Starbucks to test the coffeehouse concept in downtown Seattle, where the first Starbucks Caffè Latte was served in 1984.

The amazingly successful experiment led to the founding of Il Giornale in 1985, where they started offering brewed coffee and espresso beverages made from Starbucks coffee beans.

In 1987, Il Giornale acquired Starbucks assets and changed its name to Starbucks Corporation. The company opened its first store outside the United States in Vancouver, Canada, and other places, making it to total stores numbered 17.

In 1988, Starbucks became one of the first companies to offer full health benefits to eligible full- and part-time employees, including coverage for domestic partnerships. It was the company’s first step towards its principles and standards. And later, in 1990, they unveiled the mission of Starbucks, which was for employees and customers alike,

To establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles as we grow.

What Changes Did Starbucks Bring In Its Initial Days In The Industry?

Following its grounded principles and serving quality, Starbucks completely redefined the tradition of coffee culture in many countries.

To put it short, Starbucks –

• Introduced high-quality, speciality coffee beans that were roasted in small batches and sourced from around the world.
• Created a unique retail experience where customers were allowed to watch the roasting process and purchase coffee beans to take home.
• Offered a diverse range of coffee and tea beverages, like espresso and frappuccino-based drinks, which were not commonly found in American coffee shops then.
• Created a welcoming and comfortable atmosphere for customers to enjoy their coffee, with soft lighting, cosy seating, and background music.
• Fostered a sense of community and connection among customers and employees, with a focus on personalised service and customer relationships.
• Encouraged environmental sustainability through initiatives such as recycling and reusable cups.
• Provided employee benefits, such as health insurance and stock options, which were uncommon in the service industry then.

The Starbucks’ Business Strategies

There’s no one business strategy that made Starbucks what it is today. Instead, the company used a mix of numerous strategies to build, grow, and expand its business.

Premium Customer Experience With Third-Place Experience

The Starbucks business model is centred around providing a premium customer experience emphasising high-quality products and a welcoming atmosphere of third-place, a place away from home and work. Here are some key points to explain this:

• Premium Customer Experience: Starbucks is known for providing a high-end experience to its customers, where the customer gets the most personalised service, as the company focuses on attention to detail and providing an upscale and comfortable atmosphere.
• High-Quality Products: Starbucks prides itself on sourcing and roasting its own coffee beans, which are carefully selected for their flavour and quality. The company also offers a range of other high-quality products, including tea, pastries, and sandwiches, which is the most valuable attraction for the customers.
• Third-Place Experience: Starbucks has created a unique atmosphere in its stores that encourages customers to spend time there, whether they are working, socialising, or simply enjoying a cup of coffee. This experience of being in the “third place” away from home and work, where people can do just what they want to do, has contributed to the company’s success by building customer loyalty and encouraging customers to stay longer, buy more, and pay repeat visits.
• Personalised Service: Starbucks baristas are known for their knowledge and passion for coffee and are trained to provide personalised service to each customer. They offer recommendations to customers based on individual tastes and preferences and take the time to engage with customers in a friendly and welcoming way.
• Technology: Starbucks very smartly invested in technology to enhance its stores’ customer experience and convenience. They introduced mobile ordering, digital payment options, in-store Wi-Fi, charging plugs under each table, and more, making it easy and convenient for customers to order and enjoy their coffee, chill time, or even work.
• Employee Training and Development: Starbucks strongly emphasises employee training and development, with programs designed to help baristas develop their skills and advance their careers within the company. This investment in employees has helped to build a strong and dedicated workforce, which is essential to maintaining the high level of customer service that Starbucks is known for.

Strong Customer Relationships

Strong customer relationships are a critical part of Starbucks’ business strategy. The company aims to build a lasting relationship and connection with its customers through several means, such as its loyalty programs, Starbucks rewards, coupon cards for extensive and regular purchases, and more. The program offers various benefits, including free drinks and food on birthdays, personalised offers based on customer purchases, free refills, and more. These programs and benefits incentivise customers to return back, make purchases regularly, and strengthen relationships with the brand.

Moreover, the company collects, analyses, and uses the data to improve its products and services continually. The data they collect includes preferred drinks, ordering frequency, and payment methods. They use this data to personalise customers’ experiences by providing customised offers, product recommendations, and more.

Additionally, Starbucks has implemented several social responsibility initiatives, such as ethical sourcing and community involvement. These efforts help build trust and loyalty with customers prioritising ethical and socially responsible businesses. Starbucks fosters a strong sense of community and loyalty among its customers by creating a positive impact on the world.

Overall, Starbucks’ focus on building strong customer relationships has been a significant factor in its success as a business to date.

Strategic Global Expansion

Global expansion is one of the key elements of Starbucks’ business strategy. As it started with just one outlet in 1971, the company had 17 outlets in 1987 and has 35,711 outlets in 2023 and a presence in 76 countries. This means, on average, this coffee house chain has opened 2-3 new outlets every day since 1987.

But to have these outlets in thousands and a presence in various countries, Starbucks’ business strategy heavily relies on its licensing and franchising programs. These stores can either operate as licensed or franchised.

Licensed stores are operated within existing establishments. Companies such as Ahold Delhaize, Target Corporation, Barnes & Noble, Publix Super Markets, and Albertson Companies are a few examples of those licensed to operate Starbucks kiosks.

In most of the Europe, Middle East, and African markets, Starbucks’ franchising program is the primary market penetration strategy. Franchise owners operate new and freestanding stores independently. For instance, Anil Patil founded 23.5 Degrees Limited, Starbucks’ first UK franchised business partner, which opened the first franchise in Hampshire in 2013. It now operates 60 franchise stores across the United Kingdom.

By utilising licensing and franchising programs, Starbucks maximised market entry and global reach, appealing to different vendors with different interests in franchise and licensing programs.

Moreover, this strategy involves careful planning and analysis of each market, including the local culture, economy, and competition. Starbucks works to tailor its menu and store design to each location while maintaining its core brand identity and standards, be it the franchise or licensed store.

Starbucks’ Failure In Australia And Europe

Even though the company tried to get into the Australian and European markets with its strategic Starbucks business strategy, adopting its culture at its best, it failed in these places.

Starbucks’ failure in Australia and Europe can be attributed to several factors, including:

• Cultural differences
• Fierce competition
• A lack of understanding of local markets

Starbucks failed to resonate with consumers in Australia due to the country’s strong coffee culture. Australians have a preference for strong, bold coffee and are known for their love of espresso-based drinks like flat whites and lattes. On the other hand, Starbucks offered a range of sweet and syrupy drinks that were not aligned with Australian tastes. In addition, Starbucks’ prices were considered high compared to local coffee shops, further hindering their success.

Starbucks faced stiff competition in Europe from established local coffee shops and chains. Countries like Italy, France, and Spain have a long history and tradition of coffee culture, and Starbucks was seen as an unwelcome outsider. The company struggled to adapt to local tastes and preferences, with many Europeans preferring traditional espresso-based drinks over Starbucks’ more sugary offerings. Additionally, Starbucks faced criticism for its business practices and for contributing to the homogenisation of local cultures.

In both continents, after facing a huge loss and an unwelcoming atmosphere from the locals, the company had to shut down its outlets in non-prime locations. It planned to shut 61 stores out of 85 in 2008, and even today, Australia has only 58 stores while other countries like the US has 15,873 , China has 6091, and Canada has 2101 stores.

Starbucks’ Product Differentiation

The product differentiation strategy is crucial to the entire Starbucks business strategy. Starbucks has been able to differentiate itself by creating a unique coffee culture that sets it apart from other coffee chains.

In addition to its unique culture, Starbucks has expanded its product offerings beyond coffee by including food and other beverages. This diversification has helped the company attract more customers and increase its revenue streams.

Starbucks is committed to the sustainability and ethical sourcing of coffee beans to differentiate itself from other coffee brands further. Starbucks purchases 800 million pounds of coffee every year, or about 5 per cent of the world’s coffee, from fresh farms. This commitment helps keep consistent, improve, and evolve the coffee’s taste while supporting environmentally friendly practices and fair wages for coffee farmers.

Starbucks uses superautomatic, push-button espresso machines that reduce human error to ensure consistency and quality. This helps keep all drinks across all the stores tasting as similar as possible.

Additionally, Starbucks classifies its market based on demographic, geographic, behavioural, and psychographic factors, using a product differentiation approach to cater to the needs and preferences of each segment. As mentioned above, Starbucks integrates and moulds its products and offerings according to the place, culture, and taste requirements.

Overall, Starbucks’ product differentiation strategy, which includes creating a unique coffee culture, expanding its product offerings, commitment to sustainability, use of technology, and targeted marketing, has been successful in helping the company stay ahead of its competitors. Starbucks continues to innovate and differentiate itself to maintain its position as one of the world’s most recognised and successful coffee chains.

Starbucks’ Consistent Branding Experience

Consistent branding means presenting a unified brand image across all customer touchpoints, including in-store experience, product packaging, and marketing communications. Starbucks’ business strategy focuses on the same and consistently delivers a high-quality experience that customers expect from the brand.

The consistent branding experience has helped Starbucks build customer loyalty by creating an emotional connection with its customers. Starbucks has positioned itself as a premium brand, and customers are willing to pay a premium price for the experience they receive. The consistency in branding is something in this entire strategy which has helped reinforce the emotional connection with customers, and they keep returning for the same experience.

Starbucks has also used social media to engage with customers and build brand awareness. The company has a strong social media presence and actively engages with customers across different platforms. The company uses social media to showcase new products, promote events, and share customer stories. This engagement helps build brand loyalty and increases the likelihood of customers returning to Starbucks.

Overall, Starbucks’ consistent branding experience, emotional connection with customers, and use of social media for branding have all contributed to the company’s success in building customer loyalty.

Starbucks’ Ethical Brand Reputation

Starbucks’ ethical brand reputation refers to the company’s commitment to ethical and sustainable business practices that benefit not only its customers, employees, and shareholders but also the communities and environments in which it operates.

For Farmers

One of the ways Starbucks has established its ethical brand reputation is through its implementation of ethical sourcing practices for its coffee. The company sources its coffee beans through ethical and sustainable means, working directly with farmers and their communities to ensure that they receive fair wages and support for sustainable farming practices. This ensures the quality and consistency of the coffee and supports the economic and social well-being of the farmers and their families.

For Environment

Additionally, Starbucks has implemented environmental stewardship practices to reduce its carbon footprint and minimise its impact on the environment (and focus on green marketing ). The company has set ambitious goals to reduce its greenhouse gas emissions, increase the use of renewable energy, and minimise waste. For example, Starbucks has implemented a recycling program in its stores, and it uses eco-friendly materials for its cups and packaging.

For Employees

In addition to benefiting its customers and the environment, Starbucks’ ethical brand reputation also benefits its employees. The company offers a comprehensive benefits package, including health insurance, retirement plans, and stock options, to all eligible employees, including part-time workers. Starbucks also offers educational opportunities through its College Achievement Plan, which covers the full tuition cost for eligible employees to earn a bachelor’s degree online from Arizona State University.

Moreover, Starbucks’ ethical and sustainable practices create a positive work environment that encourages employee engagement and job satisfaction. For instance, the company has implemented fair labour practices, such as providing equal pay, advancement opportunities and fostering a culture of diversity and inclusion. These practices have helped the company attract and retain talented employees who are committed to Starbucks’ mission and values. Starbucks has built a loyal and dedicated workforce that contributes to its success by investing in its employees’ well-being and providing a positive work environment.

Starbucks’ ethical brand reputation is a critical part of its business strategy , helping the company to establish itself as a leader in ethical and sustainable business practices. This has helped to build brand loyalty among consumers who prioritise these values.

Starbucks builds strong customer relationships by understanding the needs and desires of customers and thus providing personalised service, implementing a rewards program, and engaging with customers through social media to create an overall better experience.

Starbucks’ business strategy includes creating a premium customer experience with a third-place experience (a place away from home and work), building strong customer relationships, expanding globally, implementing product differentiation, maintaining consistent branding, and promoting an ethical brand reputation.

Starbucks differentiates its products from competitors by creating a unique coffee culture, offering a wide range of food and drink options, and prioritising sustainability and ethical sourcing of coffee beans.

Starbucks differentiates itself from its competitors by creating a unique coffee culture and providing a premium customer experience focusing on creating a third-place experience. Additionally, Starbucks has expanded its product offerings beyond coffee to include food and other beverages and is strongly committed to ethical sourcing and sustainability. These factors, combined with consistent branding and customer engagement, have helped Starbucks establish itself as a leader in the coffee industry.

Starbucks’ approach to sustainability depends completely on ethical sourcing practices, reducing its carbon footprint, promoting social responsibility and environmental consciousness, and providing benefits to its employees.

Starbucks failed in Australia due to the saturation of the Australian coffee market, high competition from local coffee chains, and the high cost of real estate. Additionally, the company’s American-style coffee and business practices did not resonate well with Australian consumers, who preferred local coffee shops and cafes. As a result, Starbucks was forced to close down many of its stores in Australia, and its operations in the country have ultimately been deemed a failure.

Starbucks Statistics

Starbucks’ business strategy has been a significant factor in its success, leading to the company’s impressive growth and global reach. Today, Starbucks has become one of the most recognisable and successful coffee chains worldwide, with an extensive global presence and millions of loyal customers. Here are some statistics that showcase the scale of Starbucks’ success.

• Starbucks has a presence in over 76 countries .
• Starbucks employees over 4,02,000 employees
• There are 35,711 thousand Starbucks stores worldwide as of 2022
• Starbucks serves an average of 100 million customers per week worldwide.
• Starbucks is the largest coffeehouse chain in the world, with revenues of over $26.51 billion in 2022, says Statista 2023 report.
• On average, Starbucks sells 8 million cups of coffee daily, which means 500 cups per store.

Final Thoughts

In conclusion, Starbucks has successfully implemented a range of business strategies that have contributed to its growth and popularity over the years. The company’s focus on providing a premium customer experience and building strong relationships with its customers has helped it establish a loyal customer base.

Additionally, its strategic global expansion has allowed it to reach new markets and increase its revenue streams. While the company has faced some setbacks in markets such as Australia and Europe, it has adapted its strategies to continue its growth trajectory around the other parts of the world.

Starbucks’ product differentiation, consistent branding experience, and ethical brand reputation have all contributed to its success and helped the company stand out from its competitors. Overall, Starbucks’ innovative and customer-centric business strategies have made it one of the world’s most recognisable and successful coffee chains.

Ravpreet is an avid writer, prone to penning compelling content that hits the right chord. A startup enthusiast, Ravpreet has written content about startups for over three years and helped them succeed. You can also find her cooking, making singing videos, or walking on quiet streets in her free time.

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The Starbucks Business Model and Revenue Streams Explained

Discover the intricate workings of the Starbucks business model and uncover its diverse revenue streams.

Starbucks is not just your average coffee shop. It has established itself as a global brand with a unique business model that sets it apart from its competitors. In this article, we will delve into the inner workings of the Starbucks business model and explore the various revenue streams that contribute to its success.

Understanding the Starbucks Business Model

At the core of Starbucks' business model are a set of principles that guide its operations and differentiate it in the market. These principles revolve around creating a unique customer experience , fostering a sense of community, and providing high-quality products and services. By focusing on these aspects, Starbucks has managed to build a loyal customer base that keeps coming back for more.

The Core Principles of Starbucks' Business Model

One of the key principles that underpin Starbucks' business model is the concept of "the third place." This refers to creating a comfortable and welcoming environment where customers can relax and socialize, apart from their home and workplace. Starbucks achieves this by designing its stores with cozy furnishings, providing free Wi-Fi, and fostering a warm and inviting atmosphere.

Furthermore, Starbucks goes beyond just providing a physical space. They have carefully curated music playlists that create a soothing ambiance, making it an ideal place for people to unwind. The aroma of freshly brewed coffee fills the air, creating an inviting atmosphere that entices customers to stay longer and enjoy their time at Starbucks.

Another pillar of Starbucks' business model is its emphasis on quality. The company sources only the finest coffee beans from around the world and invests in rigorous training programs to ensure that its baristas can prepare the perfect cup of coffee. This commitment to quality extends beyond coffee to other products, such as pastries and sandwiches, which are made with fresh ingredients.

Starbucks takes great pride in its coffee bean selection process. Their expert coffee buyers travel to various coffee-growing regions, building relationships with farmers and ensuring that they adhere to sustainable farming practices. This not only guarantees the quality of the coffee but also promotes the well-being of the farmers and the environment.

How Starbucks Differentiates Itself in the Market

Starbucks stands out in the highly competitive coffee industry through several strategic initiatives. Firstly, the company places great importance on ethical sourcing and sustainability. It works closely with coffee farmers to ensure fair trade practices and invests in programs that promote environmental stewardship. This commitment to social responsibility resonates with customers who value ethical business practices.

Moreover, Starbucks is dedicated to supporting local communities. They actively engage in initiatives that empower youth, promote education, and contribute to the overall well-being of the neighborhoods they operate in. By being an active member of the community, Starbucks builds trust and loyalty among its customers.

In addition, Starbucks focuses on creating a personalized customer experience. Through its mobile app and loyalty program, the company gathers data on customer preferences and tailors its offerings accordingly. This data-driven approach enables Starbucks to anticipate customer needs and provide personalized recommendations, enhancing the overall customer experience.

Starbucks leverages technology to make the ordering process seamless and convenient for its customers. With the mobile app, customers can easily customize their drinks, place orders in advance, and skip the line by picking up their orders directly from the designated pickup area. This level of personalization and convenience sets Starbucks apart from its competitors.

Dissecting Starbucks' Revenue Streams

Now that we have a clear understanding of Starbucks' business model, let's explore the different revenue streams that contribute to its financial success.

Revenue from Company-Operated Stores

The primary source of revenue for Starbucks comes from its company-operated stores. These are the iconic coffeehouses that we see on street corners and in shopping malls. With thousands of locations worldwide, Starbucks generates substantial revenue from the sale of coffee, beverages, and food items in these stores.

Starbucks' success in this area is partly due to its ability to create a consistent and enjoyable customer experience across all its stores. From the layout and design to the friendly baristas and the aroma of freshly brewed coffee, Starbucks has mastered the art of making customers feel welcome and comfortable.

Moreover, Starbucks' company-operated stores are not just places to grab a quick cup of coffee. They have become community hubs, where people gather to socialize, study, or work. These stores often host events such as book clubs, live music performances, and even local art exhibitions. By fostering a sense of community, Starbucks has managed to create a loyal customer base that keeps coming back for more.

Revenue from Licensed Stores

In addition to company-operated stores, Starbucks also earns revenue through licensed stores. These are locations operated by partners who have obtained a license to use the Starbucks brand and sell its products. This licensing model allows Starbucks to expand its reach and enter new markets without shouldering the full cost and risk of operating its own stores.

By partnering with reputable companies and individuals, Starbucks ensures that its brand standards are upheld and that customers receive the same quality experience regardless of whether they are in a company-operated or licensed store.

Furthermore, the licensing model enables Starbucks to tap into local expertise and cultural knowledge. When entering a new market, Starbucks often collaborates with local partners who have a deep understanding of the region's preferences and tastes. This localization strategy helps Starbucks tailor its offerings to suit the local market, ensuring greater acceptance and success.

Revenue from Packaged Products and Other Segments

Starbucks has also capitalized on its brand recognition by selling packaged coffee, tea, and other products in grocery stores and online. This segment of the business provides an additional revenue stream and allows customers to enjoy Starbucks' offerings in the comfort of their own homes. Through partnerships with retailers and online platforms, Starbucks ensures widespread distribution and maximum availability of its packaged products.

Furthermore, Starbucks has ventured into other segments such as ready-to-drink beverages, premium single-serve coffee systems, and even branded merchandise. These diversifications not only contribute to revenue growth but also strengthen the brand and expand its presence in various consumer markets.

For example, Starbucks' ready-to-drink beverages, such as bottled Frappuccinos and iced coffees, cater to customers who prefer the convenience of grab-and-go options. These products are available in supermarkets, convenience stores, and even vending machines, making Starbucks' offerings accessible to a wider audience.

Additionally, Starbucks' premium single-serve coffee systems, like the Verismo machine, allow customers to recreate the Starbucks experience at home. These machines offer a range of coffee and espresso options, providing a convenient and high-quality alternative to visiting a Starbucks store.

Moreover, Starbucks' branded merchandise, including mugs, tumblers, and clothing, serves as a form of self-expression for loyal customers. By proudly displaying the Starbucks logo, customers can showcase their affinity for the brand and become walking advertisements for Starbucks wherever they go.

In conclusion, Starbucks' revenue streams extend beyond its company-operated stores. Through licensed stores, packaged products, and diversification into other segments, Starbucks has managed to create a multi-faceted business model that not only drives revenue growth but also strengthens its brand presence in the global market.

The Role of Innovation in Starbucks' Business Model

To stay ahead in a rapidly evolving industry, Starbucks has embraced innovation and continuously seeks to improve its offerings and operations.

Technological Innovations at Starbucks

One of the ways Starbucks has leveraged technology is through its mobile app and digital ecosystem. The app allows customers to order ahead, make payments, and earn rewards, all from the convenience of their smartphones. This not only enhances the customer experience but also provides valuable data that Starbucks can use to personalize its offerings and drive customer loyalty.

Furthermore, Starbucks has been at the forefront of incorporating digital advancements in its stores. From mobile order and pay kiosks to interactive digital menu boards, the company utilizes technology to streamline operations and improve efficiency, which ultimately translates into a better customer experience.

Product Innovations and their Impact on Revenue

Starbucks is known for its ability to introduce new and exciting products that capture consumers' attention. Whether it's seasonal beverages, limited-edition merchandise, or innovative brewing methods, Starbucks constantly surprises and delights its customers.

These product innovations not only drive customer traffic and increase revenue in the short term but also contribute to long-term brand loyalty. By continuously injecting freshness and novelty into its offerings, Starbucks ensures that customers keep coming back to see what's new.

Starbucks' Global Expansion and its Effect on Revenue

Starbucks' business model would not be complete without considering its global expansion and the impact it has on revenue generation.

Starbucks' Strategy for International Markets

While Starbucks originated in the United States, it has successfully expanded its footprint to over 80 countries worldwide. This global expansion is fueled by careful market analysis and an understanding of local tastes and preferences.

To adapt to diverse markets, Starbucks often tailors its menu offerings and store designs to resonate with local cultures. Whether it's introducing matcha-flavored beverages in Japan or incorporating traditional Chinese motifs in Chinese stores, Starbucks ensures that it respects and embraces local customs while staying true to its brand identity.

Revenue Growth in Different Geographical Regions

The international growth of Starbucks has had a significant impact on its revenue streams. As of 2020, Starbucks generated around 25% of its total revenue from international markets. This demonstrates the success of its global expansion strategy and the popularity of its brand outside of its home country.

While the United States remains Starbucks' largest market, the company's revenue from international markets continues to grow steadily. As more countries embrace coffee culture and develop a taste for Starbucks' offerings, we can expect this trend to continue in the future.

Future Projections for Starbucks' Business Model and Revenue Streams

Looking ahead, there are several challenges and opportunities that Starbucks will need to navigate to sustain its business model and drive revenue growth.

Potential Challenges and Opportunities for Starbucks

One challenge that Starbucks faces is increased competition from both established and emerging players in the coffee industry. As more coffee chains and independent coffee shops enter the market, Starbucks will need to remain agile and innovative to maintain its market share.

On the other hand, this competitive landscape also presents opportunities for Starbucks to collaborate and partner with other brands to create unique offerings. By joining forces with like-minded companies, Starbucks can tap into new markets, reach new customer segments, and drive revenue growth.

Predicted Trends in Starbucks' Revenue Streams

As consumer preferences and behaviors evolve, Starbucks will need to adapt its revenue streams to stay relevant. One predicted trend is the growing demand for plant-based alternatives. As more people embrace vegetarian and vegan lifestyles, Starbucks has an opportunity to expand its plant-based offerings and cater to this growing segment of the market.

Furthermore, with the rise of e-commerce and the increasing popularity of online shopping, Starbucks can explore new ways to monetize its digital platforms. From offering exclusive online promotions to partnering with delivery service providers, Starbucks can capitalize on the convenience and demand for online shopping to drive revenue growth.

In conclusion, the success of the Starbucks business model can be attributed to a combination of factors, including its core principles, revenue streams from company-operated stores, licensed stores, and packaged products, as well as its commitment to innovation and global expansion. By continuously adapting to changing consumer trends and staying true to its brand, Starbucks remains a powerhouse in the coffee industry.

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Starbucks Shares Shift in Strategy, to Automation and Expansion

The coffee giant intends to speed up drink-making and open thousands of additional locations in China over the next three years.

By Julie Creswell

Starbucks provided a window into its much-anticipated “reinvention” strategy on Tuesday, highlighting automations it plans to begin using over the next three years that will get food and drink orders to customers faster while cutting down on the work done by employees. It also pointed to high-growth markets like China, where it intends to open thousands of additional stores.

Still, the coffee giant, which has been facing a wave of unionization efforts inside stores across the United States, was light on specifics around some of the concerns that have been raised by its employees, like scheduling.

While Starbucks is largely viewed as a “winner” of the pandemic, having successfully moved customers away from in-store experiences to drive-through and mobile orders, Howard Schultz, the company’s interim chief executive, said the company had also made strategic mistakes. Mr. Schultz, who replaced Kevin Johnson as chief executive five months ago, said that, in certain ways, the company had “lost its way.”

In a meeting that ran much of the day, Mr. Schultz and other members of the Starbucks leadership team — many of whom have been installed since he took over this spring, including the newly named chief, Laxman Narasimhan, who will take over in April — gave a look into how they planned to push revenues and profits even higher in the next three years.

In recent months, Starbucks has seen a massive surge in revenues from younger customers ordering elaborate, cold, customized coffees, like venti caramel crunch frappuccinos. These cold drinks now make up 70 percent of Starbucks’ revenues. So-called modifiers of these drinks — think, a shot of espresso or three pumps of pumpkin sauce — now account for more than $1 billion in sales each year on their own.

But the complexity of the drinks, along with order surges at certain times of the day, have made barista jobs more demanding and can sometimes result in delays. To help address that, the company unveiled a new cold beverage system that reduces the number of steps needed to make the drinks, as well as the need for employees to repeatedly bend down and dig into buckets for ice. In a demonstration of the system, two Starbucks employees showed that it took 35 seconds to make a mocha frappuccino with whipped cream as opposed to 87 seconds now.

“We will never replace our baristas,” said Deb Hall Lefevre, who joined Starbucks in May as its chief technology officer. “Rather, our job is to automate the work and simplify it so that their job is easier.”

The company said that it began paying all retail employees a starting minimum wage of $15 an hour on Aug. 1. It introduced a new savings plan, which it said would include company contributions. But there were few details provided on other initiatives, such as a student loan management system and a new scheduling system.

The company noted that employee turnover was better than for the rest of the industry, but was still too high and that there was a focus on reducing it.

“We haven’t lived up to our end of the bargain with our partners,” Frank Britt, the chief strategy and transformation officer at Starbucks, said, referring to employees.

It was nearly three hours into the meeting before any executives brought up the issue of unionization. So far, more than 200 stores of the 9,000 Starbucks operates have unionized.

“On the subject of unionization, there are two paths,” said John Culver, group president of North America and chief operating officer, who is leaving the company at the end of September. “We can work together as partners, side by side, or we can have a third party between us. If we are working side by side, we can efficiently deliver solutions that support our partners in their jobs, support their physical, financial and mental well-being.”

An earlier version of this article misstated one of Howard Schultz’s roles at Starbucks. He is not the company’s founder. The error was repeated in a picture caption.

How we handle corrections

Julie Creswell is a New York-based reporter. She has covered banks, private equity, retail and health care. She previously worked for Fortune Magazine and also wrote about debt, monetary policy and mutual funds at Dow Jones. More about Julie Creswell

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Starbucks’ Generic Competitive Strategy & Growth Strategies

Starbucks Corporation (also known as Starbucks Coffee Company) grows its multinational operations through a generic competitive strategy that highlights the specialty of its products. In Michael Porter’s model, this generic competitive strategy focuses on setting the coffee business apart from competitors. On the other hand, a combination of intensive growth strategies influences the approach that Starbucks uses for growth and expansion. Based on Igor Ansoff’s matrix for business growth, these strategies for intensive growth are related to the company’s generic strategy for competitive positioning in the coffeehouse market. The intensive growth strategies align with the generic strategy to maximize Starbucks’ competitive advantages for firm performance and success. In this business analysis case, such an alignment is observable in the company’s continuing emphasis on penetrating markets with its specialty coffee products, while offering these products to customers in various market segments. The alignment of its generic strategy and intensive growth strategies reinforces Starbucks’ competitive advantages and business performance in an increasingly competitive global market.

The effective alignment between its generic strategy for competitive advantage and strategies for intensive growth supports Starbucks’ performance against competitors, like McDonald’s and Dunkin’, as well as Wendy’s , Subway , and Burger King . In the industry environment described in the Five Forces analysis of Starbucks , these competitors offer coffee in addition to their core foods and beverages and some merchandise or consumer goods. With its corporate strategic positioning to lead in the coffeehouse chain industry, Starbucks maintains its use of a generic competitive strategy that involves specialty of products, and intensive growth strategies that emphasize current and new products in the company’s current markets.

Starbucks’ Generic Competitive Strategy (Porter’s Model)

Starbucks uses broad differentiation as its generic strategy for competitive advantage. In Michael Porter’s framework, this strategy involves making the business and its products different from other coffeehouse firms. This difference highlights Starbucks’ value proposition regarding the high quality and uniqueness of its products. The company’s emphasis on specialty coffee differentiates its cafés from many other establishments that offer coffee. However, the broad differentiation generic competitive strategy extends to other areas of Starbucks Corporation. For instance, the coffeehouse business uses its sustainable and responsible sourcing policy to differentiate its products from competitors. Also, frequent introduction of new products or variants thereof contributes to the uniqueness and competitive advantage of the company’s food and beverages. This generic competitive strategy is also manifested in Starbucks’ work culture (company culture) . While competitors, like McDonald’s and Dunkin’, compete using low costs and prices, Starbucks emphasizes a warm and friendly ambiance that people enjoy.

An implication of the broad differentiation generic competitive strategy is that Starbucks must keep innovating to ensure the uniqueness of its products in the long term. With this competitive strategy, the company’s competitive advantages may weaken when competitors find ways to match or exceed the coffee company’s uniqueness. To address this issue, Starbucks keeps innovating its product mix and supply chain. In applying differentiation as a generic competitive strategy, the enterprise focuses on specialty ingredients and products, such as baked goods that do not have high-fructose corn syrup. Starbucks’ operations management  also innovates its supply chain to satisfy its generic competitive strategy through a continuous search for the most sustainable and finest ingredients. Thus, to maintain competitive advantages using this generic strategy, Starbucks’ strategic objective is to innovate products and its supply chain. These factors influence the coffeehouse company’s intensive growth strategies.

Starbucks’ Intensive Growth Strategies

Given the intensive growth opportunities in the global market, Starbucks employs multiple strategies for effective business growth. In the simultaneous implementation of its intensive growth strategies, the coffeehouse company focuses on expanding its international market presence, as well as offering products of high quality and value. Starbucks adjusts the combination of these intensive growth strategies and the emphasis on each strategy, depending on current conditions in local and regional markets.

Market Penetration . Starbucks’ main intensive growth strategy is market penetration. In the market expansion grid or Ansoff Matrix, this strategy supports the company’s intensive growth by maximizing revenues from existing markets, using the same or existing food and beverage products. Starbucks already operates in more than 80 countries and territories. To maximize revenues and growth in these current markets, the company applies market penetration by opening more company-owned stores or licensed/franchised café locations. For example, Starbucks aims to open more stores in countries where the business has a weak or limited presence, such as in Africa and the Middle East. However, the company needs to overcome regulatory and sociocultural challenges in these coffee markets. Starbucks’ marketing mix (4Ps) supports the market penetration intensive growth strategy, especially when it comes to expanding the company’s presence through strategic locations and promotions.

Market Development . Starbucks uses market development as its secondary strategy for intensive growth. This strategy supports business growth by generating revenues in new markets or new market segments by offering the company’s current product mix of food and beverages. For example, Starbucks Coffee offers its current products to more consumers by entering more countries. In market development, intensive growth opportunities are exploited by strategically growing the company’s consumer base, which equates to a larger volume of sales of food, beverages, and other merchandise.

Product Development . As another secondary intensive growth strategy, product development contributes to Starbucks’ growth through new products or variants that add to business revenues. For example, through product innovation, the company offers ready-to-drink products available at grocery stores. Product development may also come with mergers and acquisitions, such as when Starbucks started offering Frappuccino following the acquisition of The Coffee Connection. In this intensive growth strategy, new products are seen as ways of increasing sales revenues, especially in coffeehouse markets that are already saturated. The SWOT analysis of Starbucks shows that this capability to develop attractive and profitable products is one of the business strengths that support the company’s intensive growth and strategic expansion in the global market.

Continuing Starbucks’ Competitive Advantages, Intensive Growth, and Market Expansion

In using the generic competitive strategy of broad differentiation, Starbucks Corporation ensures competitive advantages through products and ingredients that establish an image of specialty and uniqueness. This generic competitive strategy translates to various policies and programs to keep the coffeehouse business differentiated against the competition. A challenge in applying this generic strategy for competitive advantage is that Starbucks must always innovate to maintain its uniqueness and attractiveness to consumers. The enterprise needs to innovate ahead of other coffeehouse firms to maintain its competitive advantages and growth based on this generic strategy.

A more detailed strategic analysis of Starbucks Corporation should consider how to support continuous growth and expansion by strengthening competitive advantages in relation to the company’s current generic strategy of broad differentiation. Also, Starbucks can apply other generic competitive strategies together with its current one to maximize business growth and competitiveness. For example, the generic strategy of focus or market segmentation can enhance competitive advantages in operating subsidiaries that complement the company’s coffeehouses. However, cost leadership as a generic competitive strategy might not work because being a best-cost provider could limit support for the premium brand image of Starbucks cafés and merchandise.

In relation to the generic competitive strategy of differentiation, Starbucks grows its business through the intensive growth strategies of market penetration, market development, and product development. These strategies facilitate business expansion despite the increasing saturation of many coffeehouse markets. Also, Starbucks has intensive growth opportunities in countries where the company’s coffeehouses are not yet popular. An approach in these countries is to employ market development along with aggressive marketing campaigns to attain the customer base needed to support business expansion within these local coffeehouse markets. Another approach is to use the product development intensive growth strategy to align Starbucks’ product mix to the distinct cultural preferences of consumers in regional or local markets. Successful expansion in these markets ensures the fulfillment of Starbucks’ mission statement and vision statement , which adhere to making the company the leading player in the global coffeehouse market and related markets for coffee products. Moreover, the business diversification intensive growth strategy can help increase Starbucks’ growth potential through operations outside the coffeehouse industry.

• Ali, B. J., & Anwar, G. (2021). Porter’s Generic Competitive Strategies and its influence on the Competitive Advantage. International Journal of Advanced Engineering, Management and Science, 7 (6), 42-51.
• Gois, T. C., Thomé, K. M., & Balogh, J. M. (2023). Behind a cup of coffee: International market structure and competitiveness. Competitiveness Review: An International Business Journal, 33 (5), 993-1009.
• Nestlé and Starbucks Celebrate Five Years of their Global Coffee Alliance .
• Pavlov, G. (2023). Strategic business planning – Theoretical analysis of business strategies. Journal of Management Sciences and Applications, 1 , 103-117.
• Starbucks Corporation – Form 10-K .
• Starbucks Corporation – Our Company .
• U.S. Department of Agriculture – Economic Research Service – Food Service Industry Market Segments .
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Starbucks Chain Business Model In A Nutshell

Table of Contents

Starbucks origin story

In 1983, Howard was a young man walking through the streets of Milan and Verona.

As Howard Schultz would put it, he became “enamored” by people’s coffee experience in the Italian bars. 

Places where the  Barista  knew the name of each person entering it, and the coffee experience was about more than just a cup of coffee; it was about creating this sense of community.

That’s how Howard Schultz set out to bring that same experience back to the US.

At that time in 1983, Starbucks had three stores in Seattle.

However, it wasn’t serving any beverage, but only coffee to bring home.

When Howard looked at the way he experienced Italian coffee, he understood the real segment of the business that could have made Starbucks truly successful was serving coffee directly to consumers.

The objective was to replicate the Italian experience back in the US. Thus, making Starbucks – in the words of its founder – the  third place between work and home.

What’s Starbucks’ mission?

Starbucks’ mission is to provide the so-called Starbucks Experience, consisting of “superior customer service and a seamless digital experience as well as clean and well-maintained stores that reflect the personalities of the communities in which they operate, thereby building a high degree of customer loyalty. “

What are the primary segments of the business?

The main Starbucks segments can be broken down in:

• Company-operated Store Revenues.
• Licensed Store Revenues.
• CPG, Foodservice, and Other Revenues.

At the geographical level instead, Starbucks operates in four main regions:

• Americas, comprising the US, Canada, and Latin America
• CAP, comprising China/ Asia Pacific
• EMEA, comprising Europe, the Middle East, and Africa
• All others, which are related instead to the development of new products, thus called “channel development” and “ includes roasted whole bean and ground coffees, premium Tazo® teas, Starbucks- and Tazo-branded single-serve products, a variety of ready-to-drink beverages, such as Frappuccino®, Starbucks Doubleshot® and Starbucks Refreshers® beverages and other branded products sold worldwide through channels such as grocery stores, warehouse clubs, specialty retailers, convenience stores and U.S. foodservice accounts. “

Is Starbucks a chain or franchising? Understanding Starbucks’ business strategy

The answer is both if we look at the mix of operated vs. licensed stores.

However, in revenue generation, company-operated stores made up more than 80% of the company’s revenues in 2022.

As specified by Starbucks in its annual reports:

The mix of company-operated versus licensed stores in a given market will vary based on several factors, including our ability to access desirable local retail space, the complexity and expected ultimate size of the market for Starbucks, and our ability to leverage the support infrastructure within a geographic region.

As the company further highlighted:

Our retail objective is to be the leading retailer and brand of coffee and tea in each of our target markets by selling the finest quality coffee, tea, and related products, as well as complementary food offerings, and by providing each customer with a unique Starbucks Experience.

To understand why Starbucks chose to increase its company-owned stores substantially, we need to look at the customer experience:

The Starbucks Experience is built upon superior customer service and a seamless digital experience as well as clean and well-maintained stores that reflect the personalities of the communities in which they operate, thereby building a high degree of customer loyalty

Thus, Starbucks wants to keep as much control over its customer experience by operating most of its stores.

In the case, for instance, of a business model like McDonald’s , the company has been able to control the look and feel of its franchised restaurants thanks to the fact it operates a commercial real estate business .

Indeed, McDonald’s leases and buys the land where franchised restaurants are operated, thus keeping tight control over their operational activities.

This formula worked for McDonald’s as the company built a multi-billion commercial real estate empire .

Starbucks, instead, picked the opposite route where the properties are primarily bought to operate its company’s owned stores and keep as much control over the experience through this business strategy .

Where do most of Starbucks’ revenues come from?

As of 2022, company-operated stores accounted for over 80% of total net revenues. At the same time, the rest came from licensed stores and other revenue. 

As specified in the Starbucks annual reports, “ In our licensed store operations, we leverage the expertise of our local partners and share our operating and store development experience. Licensees provide improved and at times, the only access to desirable retail space. “

It is important to remark that even though company-operated stores have higher gross margins . They also have a lower operating margin compared to licensed stores.

What are the most sold Starbucks products?

As specified in its annual reports:

Starbucks is committed to selling the finest whole bean coffees and coffee beverages. To ensure compliance with our rigorous coffee standards, we control coffee purchasing, roasting and packaging and the global distribution of coffee used in our operations. We purchase green coffee beans from multiple coffee-producing regions around the world and custom roasts them to our exacting standards for our many blends and single-origin coffees.

Regarding revenue generation, beverages represented most of the company’s net sales in 2022. Followed by food and other products.

Beverages comprise f resh-brewed coffee, hot and iced espresso beverages, Iced Coffee, Cold Brew, Nitro, Frappuccino® coffee and non-coffee blended beverages, Starbucks Refreshers® beverages, and Teavana® teas.

How does Starbucks protect itself from the sudden change in the price of raw coffee?

As specified in its annual reports Starbucks “ buys coffee using fixed-price and price-to-be-fixed purchase commitments, depending on market conditions, to secure an adequate supply of quality green coffee. “

Thus, the company leverages large orders to guarantee supply at a fixed price. And as specified, “ price-to-be-fixed contracts are purchase commitments whereby the quality, quantity, delivery period, and other negotiated terms are agreed upon, but the date, and therefore the price, at which the base “C” coffee commodity price component will be fixed has not yet been established. “

As the company further explains, “ for most contracts, either Starbucks or the seller has the option to “fix” the base “C” coffee commodity price prior to the delivery date. For other contracts, Starbucks and the seller may agree upon pricing parameters determined by the base “C” coffee commodity price. “

How much revenue does Starbucks make?

The US still represents the most critical geographic area in terms of revenues.

Starbucks’ transition toward a heavy company-owned business model

Starting in 2015, Starbucks completed the acquisition of a good chunk of former licensed stores, then became the company’s operated stores.

At the same time, Starbucks is unloading some of its previously operated stores to the licensee in some other geographic areas. More precisely

• 112 company-operated retail stores in Brazil were passed licensed stores as a result of the sale of Starbucks’ Brazil retail operations recorded in 2018
• Starbucks closed 132 Target Canada licensed stores in the second quarter of fiscal 2015.
• Starbucks transferred of 1,009 Japan stores from licensed stores to company-operated as a result of the acquisition of Starbucks Japan in the first quarter of 2015.
• The company also completed the transfer of 133 Singapore stores from company-operated stores to licensed stores in the fourth quarter of 2017
• The transfer of 1,477 licensed stores in East China to company-operated retail stores as a result of the purchase of our East China joint venture in the first quarter of 2018.
• And the transfer of 144 German company-operated retail stores to licensed stores as a result of the sale to AmRest Holdings SE in the third quarter of 2016.

In short, in the last 3-5 years, Starbucks has gone through a substantial business model change.

As of 2018 skewed more toward company-operated stores.

Starbucks’ business model highlights

• Starbucks is a coffee retail company that was inspired by a trip by Howard Schultz to Italy.
• When in the Bars  in Milan and Verona, he saw the whole experience of having coffee, and he realized it was way more about building communities around local coffee shops rather than just coffee itself. That’s how he thought to rebuild and bring the same kind of experience back to the US.
• At the financial level, Starbucks’ company-operated stores generated most of the revenue in 2022. 
• Company-operated stores comprised over 80% of the revenues in 2022. They contributed to Starbucks’ transition toward a heavy-chained business model where Starbucks tries to control the customer experience by controlling and buying back previously licensed stores.
• The company has also been converting some geographic areas (like Brazil and Europe) of some of the company-owned and operated stores into licensed stores.

Key Highlights

• Origin Story : Starbucks was inspired by Howard Schultz’s trip to Italy in 1983, where he observed the coffee experience in Italian bars and aimed to bring a similar sense of community back to the US.
• Mission and Vision : Starbucks’ mission is “to inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time.” The vision is to treat people like family and create customer loyalty.
• Company-operated Store Revenues
• Licensed Store Revenues
• CPG, Foodservice, and Other Revenues
• Geographical Regions : Starbucks operates in four main regions: Americas, CAP (China/Asia Pacific), EMEA (Europe, Middle East, Africa), and All Others (development of new products).
• Business Strategy : Starbucks follows a chain business model , with over 80% of revenues coming from company-operated stores. Licensed stores are also crucial for brand amplification and expansion.
• Customer Experience : Starbucks aims to provide the “Starbucks Experience” built on customer service, digital interactions, and well-maintained stores reflecting community personalities.
• Revenue Breakdown : In 2022, beverages accounted for over 61% of revenue, followed by other revenue (21%) and food (18%).
• Raw Coffee Price Management : Starbucks uses fixed-price and price-to-be-fixed purchase commitments to secure a supply of quality green coffee and protect against sudden price changes.
• Transition to Company-Owned : Starbucks has shifted towards a heavy company-operated store model , where the majority of revenues come from its owned stores.
• Acquisitions and Sales of Stores : Starbucks has acquired and converted licensed stores to company-operated stores in certain regions, while also transferring some company-operated stores to licensed stores.
• Revenue Growth : Starbucks generated over $32.2 billion in revenue in 2022, with most of it coming from company-operated stores and beverages.
• Control over Customer Experience : Starbucks’ strategy includes maintaining control over customer experience by operating a significant number of company-owned stores.

Business Model Recap

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Starbucks business model & supply chain analysis

Starbucks is the premier roaster, marketer, and retailer of specialty coffee in the world, operating in 83 markets. Starbucks purchases and roasts high-quality coffees, handcrafted coffee, tea, and other beverages, and a variety of high-quality food items through company-operated stores. 

Starbucks also sells a variety of coffee and tea products and licenses its trademarks through other channels, such as licensed stores, as well as grocery and food service through its Global Coffee Alliance with Nestlé S.A. (“Nestlé”). In addition to its flagship Starbucks Coffee brand, Starbucks sells goods and services under the following brands: Teavana, Seattle’s Best Coffee, Ethos, Starbucks Reserve, and Princi. 

Starbucks’ primary objective is to maintain Starbucks standing as one of the world’s most recognized and respected brands. Starbucks invests in its brand and operations to achieve long-term targeted revenue and income growth. This includes expanding its global store base, adding stores in both existing, developed markets such as the U.S. and in higher growth markets such as China, and optimizing the mix of company-operated and licensed stores around the world. 

By leveraging experiences gained, Starbucks continues to drive beverage, equipment, process, and technology innovation, including in its digital platform. Starbucks regularly offers consumers new, innovative coffee and other products in a variety of forms across new categories, diverse channels, and alternative store formats. 

In this strategy story, we decided to decipher the business model and supply chain of Starbucks. 

Business Model of Starbucks

Starbucks generated $32.25 billion in revenues in FY22 . The business model of Starbucks consists of company-operated stores and licensed stores. As of FY22, Starbucks had 35,711 stores, comprising 18,253 company-operated stores (51%) and 17,458 licensed stores (49%). 

The mix of company-operated versus licensed stores in a given market generally varies based on several factors, including its ability to access desirable local retail space, the complexity, profitability, and expected ultimate size of the market for Starbucks, and its ability to leverage the support infrastructure within a geographic region.

Total net revenues increased $3.2 billion, or 11%, over fiscal 2021, primarily due to higher revenues from company-operated stores ($2.0 billion).

• The growth in company-operated store revenue was driven by an 8% increase in comparable store sales ($1.8 billion), attributed to a 5% increase in average tickets and a 2% increase in similar transactions.
• Licensed stores’ revenue increased by $972 million, primarily driven by higher product and equipment sales and royalty revenues from its licensees.
• Other revenues increased by $249 million, primarily due to higher product sales and royalty revenue in the Global Coffee Alliance and growth in its ready-to-drink business.

Company-operated Stores 

Revenue from company-operated stores accounted for 82% of total net revenues during FY22. Starbucks’ retail objective is to be the leading retailer and brand of coffee and tea in each of Starbucks’ target markets by selling the finest quality coffee, tea, and related products, as well as complementary food offerings, and by providing each customer with a unique Starbucks Experience. 

The Starbucks Experience is built upon superior customer service, convenience, and a seamless digital experience, as well as safe, clean and well-maintained stores that reflect the personalities of the communities in which they operate, thereby building a high degree of customer loyalty. 

Starbucks company-operated stores are typically located in high-traffic, high-visibility locations. Starbucks’ ability to vary the size and format of its stores allows it to locate them in or near various settings, including downtown and suburban retail centers, office buildings, university campuses, and rural and off-highway locations. 

Starbucks has plans to increase the efficiency of its business model while elevating the partner and customer experience (the “Reinvention Plan”). Starbucks believes investing in partner wages and training will increase retention and productivity. At the same time, the acceleration of purpose-built store concepts and technological innovations will provide additional convenience and connection with customers. 

Today at Investor Day, Starbucks is unveiling their "Reinvention Plan" for the company. Since workers aren't invited to Investor Day, we wanted to share our own vision for the future of Starbucks. pic.twitter.com/fw2bREozkX — Starbucks Workers United (@SBWorkersUnited) September 13, 2022

Starbucks strongly focuses on increasing digital adoption to provide convenience and elevate the customer experience. These strategies align closely with rapidly evolving customer preferences, including higher levels of mobile ordering, more contactless pick-up experiences, and reduced in-store congestion, all of which naturally allow for greater physical distancing. 

Starbucks Marketing Mix (4Ps)

Stored Value Cards and Loyalty Program:  The Starbucks Card, Starbucks’ branded stored value card program, is designed to provide customers with a convenient payment method, support gifting, and increase the frequency of store visits by cardholders, in part through the related Starbucks Rewards loyalty program where available. 

How does Starbucks’ unique promotion strategy aid in its massive success?

Licensed Stores 

Revenues from licensed stores accounted for 11% of Starbucks’ net revenues in fiscal 2022. Licensed stores generally have a lower gross margin and a higher operating margin than company-operated stores. Under the licensed business model, Starbucks receives a margin on branded products and supplies sold to the licensed store operator and a royalty on retail sales. 

Licensees are responsible for operating costs and capital investments, which more than offset the lower revenues Starbucks receives under the licensed store model. In its licensed store operations, Starbucks seeks to leverage the expertise of its local partners and share its operating and store development experience. Licensees provide improved and, at times, only access to desirable retail space. Most licensees are prominent retailers with the in-depth market knowledge and access. 

As part of these arrangements, Starbucks sells coffee, tea, food, and related products to licensees for resale to customers and receives royalties and license fees from the licensees. Starbucks also sells certain equipment, such as coffee brewers and espresso machines, to its licensees for use in their operations.

Other Revenues 

Other revenues primarily include sales of packaged coffee, tea, and ready-to-drink beverages to customers outside of its company-operated and licensed stores, as well as royalties received from Nestlé under the Global Coffee Alliance and other collaborative partnerships. Others accounted for 7% of Starbucks’ revenue in FY22.

Supply Chain of Starbucks

Starbucks is committed to selling the finest whole bean coffees and coffee beverages. To help ensure compliance with its rigorous coffee standards, Starbucks substantially controls all coffee purchasing, roasting, and packaging and the global distribution of coffee used in its operations, as part of its supply chain strategy.

Nestlé controls the distribution of certain finished goods through the Global Coffee Alliance. Starbucks purchases green coffee beans from multiple coffee-producing regions around the world and custom roasts them to its exacting standards for many blends and single-origin coffees. 

Starbucks SWOT Analysis

The price of coffee is subject to significant volatility. Both the premium and the commodity price depend upon the supply and demand at the time of purchase. Supply and price can be affected by multiple factors in the producing countries, including

• water supply quality and availability throughout the coffee production chain,
• natural disasters,
• crop disease, and pests,
• a general increase in farm inputs and costs of production,
• inventory levels, and political and economic conditions.

Depending on market conditions, Starbucks buys coffee using fixed-price and price-to-be-fixed purchase commitments to secure an adequate supply of quality green coffee. 

Starbucks prices products on value not cost. Why?

Starbucks depends upon its relationships with coffee producers, outside trading companies, and exporters for the supply of green coffee. To secure the supply chain of high-quality green coffee, Starbucks operates ten farmer support centers.

Farmer support centers are staffed with agronomists and sustainability experts working with coffee farming communities to promote best practices in coffee production designed to improve coffee quality and yields and agronomy support to address climate change and other impacts. 

In addition to coffee, Starbucks also purchases significant amounts of dairy and plant-based dairy-free alternative products, particularly fluid milk, oat milk, and almond milk, to support the needs of its company-operated stores. 

Starbucks PESTEL Analysis

Products other than whole bean coffees and coffee beverages sold in Starbucks stores include tea and many ready-to-drink beverages purchased from several specialty suppliers, usually under long-term supply contracts. Food products, such as pastries, breakfast sandwiches, and lunch items, are purchased from national, regional, and local sources. 

Starbucks also purchases a broad range of paper and plastic products, such as cups and cutlery, from several companies to support the needs of its retail stores and manufacturing and distribution operations. Starbucks is also expanding its use of reusable packaging to reduce landfill waste. 

A passionate writer and a business enthusiast having 6 years of industry experience in a variety of industries and functions. I just love telling stories and share my learning. Connect with me on LinkedIn. Let's chat...

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Strategy Plan Example: A Look at Starbucks

In today’s fiercely competitive coffee industry, a well-brewed strategy plan is the secret ingredient to Starbucks’ enduring success. 

In this article, examine the world of strategy planning by exploring Starbucks’ real-life strategy plan example, breaking down its components, and highlighting actionable insights for your own business.

Overview of Strategy Planning

First, take a look at how strategy planning works in the context of Starbucks’ own process.

Strategy Planning: The Core of Starbucks’ Success

For Starbucks, strategy planning is the cornerstone of its global coffee empire. It involves aligning its mission to inspire and nurture the human spirit, one person, one cup, and one neighborhood at a time with concrete objectives, ensuring that every store, every barista, and every cup of coffee reflects this mission.

Strategy Plan vs. Business Plan

While Starbucks has a comprehensive business plan, its strategy plan drills down into specifics. It outlines everything from product launches and store expansion to marketing campaigns and sustainability initiatives, ensuring every element supports its overarching goals.

Components of Starbucks’ Strategy Plan

Now, Take a look at the components of Starbucks strategy plan. Then reverse engineer this strategy plan example for your own business.

Setting Clear Objectives

Starbucks’ current SMART objectives include growing revenue by 10 to 12% annually from fiscal years 2023 to 2025 and reducing the environmental impact of cups and other waste by 50% by 2030. These objectives provide a clear roadmap for the company.

Doing Situation Analysis

A significant part of Starbucks’ strategy planning involves analyzing global coffee consumption trends, identifying new market opportunities, evaluating competitors’ strengths and weaknesses, and assessing the impact of social and environmental factors on its business.

Identifying Its Target Audience

Starbucks segments its audience meticulously, catering to coffee aficionados seeking premium brews and environmentally-conscious consumers valuing sustainability.

Creation of Starbucks’ Strategy Plan

Next, look how the coffee giant puts together its winning strategy. How could you learn from Starbucks’ success and do the same in your business?

Defining Strategies and Tactics

For Starbucks, a strategy might involve expanding its digital offerings by launching a mobile app for ordering and payment, while tactics include implementing contactless payments and creating a user-friendly app interface.

Action Plan and Timeline

Starbucks’ strategy plan outlines the rollout of new products, store openings, and marketing campaigns with precise timelines and resource allocation to ensure efficient execution.

Risk Assessment and Mitigation

In a rapidly changing industry, Starbucks continually assesses risks, such as changing consumer preferences or supply chain disruptions. Mitigation strategies include diversifying its product lineup and building resilient supply chains.

Case Study: Starbucks’ Real-Life Strategy Plan

Now, pull back the curtain on Starbucks real-life strategy plan and see what parts of it might work for your venture.

Introduction to the Case Study

Starbucks, a global coffee giant founded in 1971, has consistently demonstrated the power of an effective strategy plan. Its journey from a single store in Seattle to a global phenomenon is a testament to the significance of strategic planning.

Overview of Starbucks

Starbucks operates over 35,000 stores in more than 80 countries, serving millions of customers daily with a range of beverages, food items and merchandise. Their strategy plan not only focuses on growth but also emphasizes social responsibility and sustainability.

Overview of the Strategy Plan

Starbucks’ strategy plan involves a combination of expanding its store footprint in emerging markets, enhancing its digital customer experience, and investing in sustainable sourcing practices. This holistic approach has led to steady growth and a strong brand reputation.

Implementation of Starbucks’ Strategy Plan

Finally, examine how Starbucks puts its winning strategy plan in action. What lessons can you take away from this strategy plan example for your own business?

Communication and Stakeholder Engagement

Starbucks engages its stakeholders through regular updates on its sustainability initiatives, coffee sourcing practices, and philanthropic efforts. This transparent communication builds trust and reinforces its brand image.

Monitoring and Evaluation

Starbucks tracks KPIs such as store sales, customer satisfaction scores, and carbon footprint reduction progress. This data-driven approach allows the company to adapt its strategies as needed to achieve its objectives.

Continuous Improvement

No strategy survives changes in customer behavior and the market in general without some adaptations. See how Starbucks’ strategic plan remains flexible. How could you replicate this in your own business strategy?

The Iterative Nature of Starbucks’ Strategy Planning

Starbucks recognizes that the coffee industry is ever-evolving. It remains committed to continuously evaluating its strategy plan, embracing innovation, and staying attuned to changing consumer preferences to maintain its leadership position.

Starbucks’ success story exemplifies how a well-structured strategy plan can drive long-term growth and sustainability.

By understanding the components of Starbucks’ strategy plan, including clear objectives, thorough situation analysis, and audience segmentation, you can apply similar principles to your own business ventures.

Remember that strategy planning is an ongoing process that requires adaptability and a commitment to improvement. Whether you’re a coffee lover or a business enthusiast, Starbucks’ strategy plan offers valuable insights that can inspire your strategic endeavors.

Strengthen your business strategy by taking our BizSugar Mastermind Unleashing Proven Strategies Challenge .

2 thoughts on “ Strategy Plan Example: A Look at Starbucks ”

Starbucks, a legend brand business for a coffee industry. But right now I do not understand it’s coffee for Starbucks is coming from. In Indonesia you know are very well known as a country for the best coffee tasted for several country in the world to exported. Such as Arabica Red Coffee as a wine coffee has a special taste that very original kind of tropical coffee. For whom who want to taste the Arabica Coffee of Indonesia, you can try it. Thank you for your share here. Good luck for your bizsugar.

That is a fantastic piece of information! I loved every bit of it, and worth reading. This article can make many people successful just by reading it. I hope you reach the sky. Also, if you want to know more about how to make strategies and earn passively check out passive income .

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Business Model of Starbucks | How Starbucks is different from its Competitors

Pratyusha Srivastava

Thinking about coffee? Yeah me too! And when it's about coffee, no one can beat Starbucks! The most delicious American coffeehouse and company. But what keeps this company incredibly successful?

So, to bring a better perspective towards the business model of Starbucks, we have presented this article for you. Starbucks was based in Seattle, Washington, and started to nurture people with the pleasure of coffee at a time. And today, this coffeehouse is established in more than 30,000 places across the globe.

Starbucks is a choice for all! Through this article, we would get to know all the essential strategies of Starbucks business model and how the company operates and makes money. We will discuss the strategies, plan, and revenue model. But most importantly, we will know what's unique about the Starbucks business model that keeps it at the top. Let's get started!

About Starbucks Where does Starbucks operate? Key Product and Services of Starbucks Target Audience of Starbucks Business model of Starbucks What is unique about the business model of Starbucks? The Gold Card Reward by Starbucks How does Starbucks make Money? FAQ

About Starbucks

The American based multinational chain of coffeehouses, Starbucks is headquartered in Seattle, Washington. Starbucks is responsible for the utmost coffee culture in the United States.

The coffeehouse was founded by Jerry Baldwin, Gordon Bowker and Zev Siegl in 1971 (around 50 years ago). Starbucks was widely welcomed by Americans in their coffee culture. And now, Starbucks is well-established in around 32,660 places across the world, as of 2020. It serves over 83 countries worldwide.

Starbucks is well known for serving utterly delicious hot and cold drinks, whole-bean coffee, various instant flavoured coffee including espresso, latte, and others. It also serves loose-leaf teas such as Evolution Fresh juices, Frappuccino, and many others. La Boulange pastries and other snacks as well. Moreover, Starbucks offers tons of different customer based offers like free Wi-Fi and many others.

Where does Starbucks operate?

Starbucks is widely famous and well established in around 83 countries with a total of 29,865 stores (including the licensed shops & kiosks and company based retail outlets) across the world. In the United States, Starbucks has around 14,758 outlets, in Canada 1,542, in China 3,684, in Japan 1,414 and so on.

Key Products and Services of Starbucks

Starbucks mainly focuses on better interaction with its customers . Therefore, it offers its key services such as communication for a better connection with audiences. The bond between customers and the coffeehouse becomes very strong. And Starbucks always gets the best relationship throughout.

This also encourages a calm and relaxing environment inside Starbucks' stores. They aim to touch the inner soul of their customers. And in such a manner, the consumers always come back for more coffee and snacks.

Target Audience of Starbucks

The world-famous chain of coffeehouses, Starbucks targets its audience through demographic segmentation. It mainly targets people aged 25-44 years. This rounds up around half of the total business revenue.

The next large target group is young adults around the age of 18-24 years. Through these major groups, Starbucks earns a great source of revenue . And these together bring around 40% of total Starbucks' sales.

Business model of Starbucks

The business model of Starbucks is entirely based upon the company the offer provides to its customers and architecture and networking partner for the creating, delivering and marketing value formulated from valuable revenue streams.

Starbucks' business model is well designed to make the business work and also, how it can make more profit. Starbucks gathers its value through incredible customer interaction and experience.

Starbucks gives people the pleasure of drinking coffee. It creates a calm and relaxing environment for its customers with great quality beverages in its coffeehouses. Starbucks has always been pretty creative in its business methods and strategies.

It offers instant on-time delivery to its customers, consistently. Now that we have the basic idea of the business model of Starbucks, let's get our minds to what is unique about its business model and how it actually makes money .

What is unique about the business model of Starbucks?

Starbucks has opted for the most creative and unique marketing strategies . It has received immense success through its business model and strategies. But the thing that makes the business model utterly unique is the Classic Logo which works best to engage more loyal customers throughout. The concept of the logo is to gather a huge audience base.

The other thing is how it presents its advertisements to its customers. With its store , modern cup design, digital content and many others, it provides the customers with a feeling of warmth and comfort. That's why the audience connects more with Starbucks.

The Gold Card Reward by Starbucks

There was a time in 2008 when Starbucks was going through some really hard times. And that's when Howard Schultz was re-appointed as the CEO of Starbucks, who took the company with some very remarkable alterations.

Schultz's most incredible initiative was the reward system. In this, the customer deposits some money in their Starbucks account and when you use the money for buying coffee, the company rewards you.

This became the most successful plan and around 41% of Americans preferred the Starbucks app for payments. And whenever the customer buys any beverages, they indirectly lend money to Starbucks at a 0% interest rate.

The money earned through this plan was invested into different ventures, for the upgradation of the company. The most incredible thing about this reward system is that the customer can only use the money to buy coffee from Starbucks and through this, there is a never-ending financial deal with the customers .

How does Starbucks make Money?

Starbucks revenue model is categorized into three portions that are, operated stores, licensing fees from licensed stores, and another channel growth. A large fraction of revenue comes from the company-operated stores. According to a report of 2018, around 80% of total revenue comes from this segment only .

The next is the licensed stores. Although this does contribute much (11% to the total revenue) but is known to be very popular. The licensed stores hold lower margins and high operating margins as compared to the company-operated stores. These licensed stores sell tea, coffee, snacks and other Starbucks products and generate royalties and license fees for Starbucks.

The third source is sales of packaged tea, coffee and other instant beverages to the customers, outside the company-operated and licensed stores. Also, some premium coffees, Food items, Whole bean Coffees and others.  

Moreover, Starbucks also sells a few coffee machines and equipment like an espresso machine, coffee brewers and others to the licensed stores generally.

Starbucks business model is quite known for its strategic deals and promotions. Their business model is utterly successful and always finds more customer engagement. It puts a good impact through its licensed and company-operated stores. It works with simplicity and stands up to its ethics.

Today, Starbucks is a well-established company with a huge audience base. The business model of Starbucks shows that with utter determination and hard work, you can achieve everything in your hand.

What is the revenue of Starbucks?

Starbucks had a net revenue of 19.16 billion U.S. dollars in 2020.

Who is the founder of Starbucks?

Gordon Bowker, Jerry Baldwin, and Zev Siegl founded Starbucks in 1971.

Is Starbucks owned by Tata?

Tata Starbucks Private Limited is a joint venture company owned by Tata Consumer Products and Starbucks Corporation.

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Starbucks and its workers union plan to start bargaining this week

Back in april, the two parties said they had made "significant progress".

Starbucks and Workers United are heading back to the bargaining table this week, the union confirmed in an email to Quartz.

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This week’s session picks up where the two parties left off in late April , when Starbucks and Workers United, the union that covers workers across the chain’s U.S. locations, said that they had made “ significant progress .”

That bargaining period, however, took place just days before the company reported second quarter earnings that revealed the chain was struggling to reach consumers globally. Starbucks said that sales and in-store traffic had both declined during the period, prompting its shares to fall to its worst post-earnings level since 2000.

The dismal performance also garnered the attention of Howard Schultz, Starbucks’ former chief executive officer. In a LinkedIn post, Schultz said the company’s “U.S. operations are the primary reason for the company’s fall from grace ,” and that “the stores require a maniacal focus on the customer experience, through the eyes of a merchant.”

“The answer does not lie in data, but in the stores,” Schultz said.

Even with a decline in consumer spending, the chain’s current CEO Laxman Narasimhan told investors during the earnings call in May that Starbucks was fully committed to its “ Triple Shot Strategy ,” which included making improvements to its U.S. stores.

“Specifically in our U.S. stores, we’re focused on creating a more stable environment for partners through investments in equipment innovation, process improvements, staffing, scheduling and waste reduction, all things our partners value, and prioritize creating a more satisfying work environment in our stores while de-risking our business,” Narasimhan said.

Bargaining talks this week could provide more clarity on where the chain stands as it looks to improve its relationship with its employees , who are pushing for better pay and enhanced benefits , as well as improvement in staffing and scheduling.

In the meantime, Starbucks is moving along with store and product redesigns. Thus far, the chain has opened new locations with improved features , including dampening baffles in its ceilings to diminish background noise and echos . Those changes are also in part meant to help customers with hearing loss .

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Starbucks to equip all stores with LG tumbler washers by 2026

Starbucks-tumbler washer

SEOUL, May 27 (Yonhap) -- Starbucks Korea plans to equip all its stores nationwide with travel mug washers manufactured by LG Electronics by 2026 in a bid to reduce the use of disposable cups, officials said Monday.

The plan was announced after the environment ministry forged a business agreement with Starbucks, LG Electronics and the Korea Zero Waste Movement Network to encourage the use of multiuse cups for cafe beverages.

Under the plan, the coffee chain plans to install LG's tumbler washer, "LG mycup," at all its outlets across the country by 2026, including 600 stores this year.

Installation will begin in July at stores in Seoul, the central city of Sejong and the southern resort island of Jeju, the ministry said.

Currently, LG mycup is in a pilot operation at four Starbucks cafes. Since the installations, the number of customers using personal travel mugs has risen by about 30 percent at those stores, according to Starbucks.

"Currently, the use of personal multiuse cups accounts for 7 percent of total beverage orders," the coffee chain said, adding that it plans to more than double the ratio by 2026.

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China's gold rush shows the Chinese still have money to spend — they're just not into Starbucks or Gucci

• China's gold buying is sending prices to record highs amid economic uncertainties.
• China's consumers are hedging risks, avoiding luxury brands such as Starbucks and Gucci.
• Instead of premium imported brands, they're pivoting to cheaper domestic brands for discretionary products.

China's buying up a lot of gold , sending prices of the precious metal to record highs.

The consumption trend reflects risk hedging and a lack of confidence in the flagging economy that has been struggling to regain momentum since lifting on-off pandemic lockdowns.

It also reflects that there's money in the system — but Chinese consumers are just really not that keen on dropping their hard-earned cash at Starbucks or Gucci .

China's economy is facing multiple risks and uncertainties, including an epic real-estate crisis, stock-market volatility, geopolitical headwinds, and demographic challenges.

"With China's population facing rapidly aging demographics, Chinese households are trying to boost their retirement savings at a time when real estate and equity markets have been weak," Rajiv Biswas, an international economist who's also the author of " Asian Megatrends ," told Business Insider.

Last year, China's demand for gold jewelry rose 10% from 2022 to 630 tons acquired, making the country the world's largest buyer of the commodity, according to the World Gold Council . China's demand for gold jewelry softened in the first quarter of this year because of the surge in gold prices but still held up well, according to the council .

Gen Z Chinese consumers ditch luxury for gold

Despite their rush into gold assets, Chinese consumers aren't running out to buy other stuff, particularly foreign imports.

This is a problem, particularly for luxury retailers, as China's demand for high-end products fueled supercharged growth in the industry for years.

This is no longer the case.

LVMH Moët Hennessy Louis Vuitton , the world's largest luxury group, reported in April that Asia's revenues outside Japan fell 6% in the first quarter compared with the same period a year ago.

Kering , a luxury retailer that owns brands such as Gucci and Yves Saint Laurent, issued a profit warning because of the challenging market in China.

In a reflection of how many shoppers fell out of luxury buying, Chinese shoppers were responsible for about 23% of luxury goods spending at the start of the year — down from 33% pre-pandemic, a Bloomberg analyst said recently.

China's consumers are buying cheaper domestic products

Even imports are taking a hit, with the coffee chain Starbucks reporting in April that a slower-than-expected recovery in China would lead to lower annual growth this year.

Starbucks CEO Laxman Narasimhan said in a first-quarter earnings call that many customers were being "more exacting about where and how they choose to spend their money."

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Nomura analysts said in an April report that younger Chinese consumers had become "much less enamored with foreign premium products, and now seem to prefer low-cost domestic substitutes."

In the case of Starbucks, Luckin Coffee — China's biggest coffee chain — is aggressively putting out beverage deals at attractive prices to beat the American company.

Patriotism is also playing into the trend. That's true even for some products that are around the same price as imported ones, such as a recent surge in Huawei phone deliveries amid plunging iPhone sales and a similar trend with Tesla versus BYD electric vehicles, as the Nomura analysts noted.

China's painful economic transition, which is causing a bumpy economic outlook for its people, is contributing to this trend.

"As income growth slows, coupled with heightened unemployment risks, the high premium paid for foreign brands has become increasingly hard to justify," the Nomura analysts wrote.

China's GDP per capita is still expected to rise

Despite the gloom, there are green shoots in China's economy.

April data showed consumers in the country were buying fewer things — such as clothing, cosmetics, and jewelry — but they were spending on experiences .

Consumption in the "eat, drink, and play" categories of catering, tobacco and liquor, and sports and recreation outpaced headline consumption growth. Lynn Song , the chief economist for the Greater China region at the Dutch bank ING, wrote that this showed consumers had been "forgoing big-ticket purchases in favor of spending in these categories in 2024."

This preference for experience spending also spills over to the consumer sector. LVMH's chief financial officer, Jean-Jacques Guiony, said in April that more Chinese consumers were spending money outside their country as they resumed traveling.

Even so, Chinese consumers are still expected to retain their appetite for gold.

GDP by capita in the world's second-largest economy is also still expected to rise from $12,700 in 2023 to $18,000 by 2030 — which Biswas, the economist, said was likely to boost gold demand in the future.

The weak Chinese yuan is leading consumers to buy gold with their savings to hedge against currency risks.

China's savings rate was about 32% last year, compared with about 4% in the US, a McKinsey analysis of official data found.

"As consumer sentiment continues its slump, consumers prefer to sock their cash away in the bank rather than spend it, pushing the savings rate higher," McKinsey wrote in April.

The spot gold price is about $2,335 an ounce after it hit a record high above $2,400 on May 21.

There may be more upside for the yellow metal.

"Chinese households are increasingly confronted by the weak long-term Chinese growth outlook and the slumping prices in China's residential real estate market," Biswas said.

The economist said those woes would continue to drive investors, especially those looking to boost their retirement savings, to gold.

Get the latest Gold price here.

Watch: Why the retail industry has its eye on Gen Z

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