Starbucks

Overview

Starbucks Corporation is an American multinational chain of coffeehouses and roastery reserves headquartered in Seattle, Washington. As the world's largest coffeehouse chain, Starbucks is seen to be the major representation of the United States' second wave of coffee culture. Starbucks first started in 1971 in Seattle, Wa. Starbucks was started by 3 men, Gordon Bowker, Zev Siegle, and Jerry Baldwin. They had invested and borrowed some money to open their first store. In 1982, Howard Shultz joined the Starbucks corporation as director of retail operations and marketing. In 1983, Shultz traveled to Italy, and was impressed with the popularity Of Coffee bars in Milan. The next year, Shultz convinces the founders to test the coffeehouse concept in Seattle, and the first Starbucks cafe latte is born. SKipping a few years, Starbucks expands their headquarters in 1990, and reveals their mission statement:“To establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles as we grow.” The next year, Starbucks became the first privately owned US company to offer a stock option program that includes part time employees. In 1992, Starbucks officially completed their initial public offering. At this point, Starbucks has 165 total stores. In 1994, Starbucks opened their first drive thru location. In 1998, they extended the Starbucks brand into grocery channels across the U.S. In 2000, Starbucks opened stores across the world in locations such as Australia, Bahrain, Hong Kong, Saudi Arabia, and more. In 2008, Chairman Howard Shultz became chief executive officer and began the transformation of the company. Starbucks is still expanding, and bettering coffee to this day.

Business Lines

Starbucks has 3 main business lines: Beverages, Food, and others. Their biggest business line that brings in the most revenue is their beverages. Some of the drinks that they offer include, coffees, teas, frappuccinos, juices, and even custom drinks. Almost 75% of all sales come from just beverages. 20% come from food, and 6% from others.

Revenues($B)

Year201620172018201920202021Revenue$21.316$22.387$24.720$26.52$23.5$29.06

The revenues have gone up every year other than 2020. However, it spiked up drastically the following year. In the last 5 years, revenues have increased by almost 8 billion yearly.

Revenues($B)

Year201620172018201920202021Beverage$12.38$12.92$14.46$15.92$14.34$18.32Food$3.49$3.83$4.4$4.79$3.8$5.05Others$5.44$5.64$5.86$5.79$5.38$5.69

The beverage segment’s revenues are increasing at a consistent rate, and seem to be a great line in the future. Additionally, food’s revenues have also been increasing over the previous years. However, other revenues have gone up and down. With beverages being the most significant business line for Starbucks, that would be the product to watch for investors.

Competition

The Coffee business is where not only 1 company dominates the market. Some of Starbucks biggest competition include:

• Dunkin Donuts

• Mc Cafe

• Tim Horton

• Peet's Coffee

• Lavazza

• Local competitors

There are also local coffee shops that attract customers from their cheap prices, hospitality, and unique flavors. Additionally, many people are not able to afford starbucks on a daily basis. The next options are either making it at home, or buying it at a cheaper price. The US and China are leading in the most Starbucks stores globally. There are 15,041 stores in the US alone, and it is still growing. Statistics say that the average Starbucks customer visits the store 6 times a month, and 20% of customers visit 16 times a month.

Summary

I think Starbucks is a good company to invest in. There are both pros and cons in the company, but there are more overpowering pros. The revenues are growing at an exponential amount, and profits are growing as well. There are more customers every day, and more stores that are being made everyday. However, there is a lot of competition in this industry. With coffee shops being something that doesn't require a significant amount of funding, or financial support, opening one is easier than other businesses.