STARBUCKS

COFFEE
Business Analysis
Compiled By;
Qamarudheen Thayyil
khamarudheent@gmail.com
+919-6259-234-12

www.starbucks.com
Intrduction
Overview
Histrory
Mission
Key People
 3
I
Overview n
t
Starbucks is a world renowned specialty coffee r
maker. d
u
It roasts, markets and retails specialty coffee.
c
It offers blends of coffee, handcrafted beverages, t
merchandise, and food items, ready-made drinks,
and Starbucks ice cream.
i
o
It markets all of its products under the flagship n
Starbucks brand.
 4
I
Overview n
t
It also market some products under brands such r
as Tazo Tea, Seattle’s Best Coffee, Starbucks VIA, d
Torrefazione, Italia Coffee, and Evolution Fresh. u
The company-owned and licensed stores c
operates across Asia-Pacific, the Middle East, t
Africa, Europe and the Americas.
i
Total stores: 19767 (as of September 29, 2013) o
Company-operated - 10194. n
Licensed stores - 9573.
 5
I
History n
t
The first Starbucks store opened in Seattle’s r
Pike Place Market in 1971. d
u
The company grew to be the largest roaster in
Washington with multiple locations until the c
early 1980’s. t
In 1981,Howard Schultz, recognized a great
i
opportunity and began working with the founder o
Jerry Baldwin. n
 6
I
History n
t
Schultz wanted to bring the Italian café culture r
to the United States. Selling espresso by the cup d
was the first test. u
Schultz left Baldwin to open his own and raised c
money from investors to purchase the t
Italian Coffee House Giornale.
i
The company experienced rapid growth going o
public in 1992, and growing tenfold by 1997, n
with locations around the United States, Japan
and Singapore.
 7
I
History n
t
Starbucks also began expanding its brand by; r
Starbucks coffee on United Airlines flights. d
Selling premium teas via Tazo Tea Company. u
Offering order Starbucks coffee online.
c
Introduced new products and operations. t
Today, Starbucks has millions of customers
i
every day, in about 19,000 locations in over o
62 countries which have employed approximately n
1,82,000 partners worldwide.
 8
I
Mission n
t
“To inspire and nurture the human spirit one r
person, one cup, and one neighborhood at a time.” d
u
It ethically sources the finest coffee beans.
c
It embraces diversity. t
It provides a human connection with employees.
i
o
It creates stores where customers feel comfortable. n

It takes responsibility in each community.

 9
I
Key People n
t
Howard Schultz r
Chairman
President d
Chief Executive Officer

Troy Alstead
u
Chief Financial Officer and Group President, Global Business Services c
Adam Brotman
Executive Vice President, Chief Digital Officer t
Curtis Garner
Executive Vice President, Chief Information Officer i
Sharon Rothstein
Executive Vice President, Global Chief Marketing Officer
o
Arthur Rubinfeld n
Chief Creative Officer, President, Global Innovation And
Matthew Ryan
Executive Vice President, Global Chief Strategy Officer
PRODUCTS
Drinks
Food
Merchandise
 11
P
Drinks R
O
D
U
C
Cappuccino Espresso
T
S

Non-Coffee Frappussino®
 12
P
Food R
O
D
U
C
Pastry/ Cakes
T
Sandwitch
S

Muffins Cookies
 13
P
Merchandise R
O
D
U
C
T
Tumblers Blends
S

Mugs Coffe Makers

SWOT Analysis
Strengths
Weaknesses
Opportunities
Threats
 15
S
Strengths W
O
T
Innovation
Global presence A
n
Strong financials a
l
Brand identity y
s
Store ambience i
s
 16
S
Weaknesses W
O
T
High employee turnover

Over dependence on US market A

n
Small product mix a
l
Higher prices y
s
Too many products i
s
 17
S
Opportunities W
O
T
International markets

Customization A
n
Inorganic growth a
l
New product mix y
s
Localization i
s
 18
S
Threats W
O
T
Intense competition

Govt. Regulations A
n
Uncertain suppliers a
l
Target of terrorism y
s
Saturated US market i
s
Strategy
Success Formula
Internalization
 20
S
Success Formula T
R
Motivated employees & superior customer A
service is the key success factor of Starbucks. T
E
Starbucks focuses
on recruiting and G
developing right Y
people.

Attractive
compensation Starbucks partner serving coffee with a smile :)
policies.
 21
S
Market Entry T
R
A
T
E
G
Y

Local joint-venture is the preferred

entry strategy of Starbucks.
Financial Analysis
Share Price
Sales Mix
Income Statement
Earnings
Balance Sheet
 23
F
Share Price I
N
$77.84
A
$67.48 $65.82

$56.55
$62.00
$58.97
$56.65
N
$54.28 $54.90
$46.50 $45.28
$51.03
$44.27
$52.39
C
$43.04
$35.12 I
A
L
S
12Q1 12Q2 12Q3 12Q4 13Q1 13Q2 13Q3 13Q4
High Low
 24
F
Sale Mix I
N
74% 75% 75% A
N
C
I
A
20% 19% 19%
L
3% 3% 4% 2% 4% 2% S
2013 2012 2011
Beverages Food Packaged and single serve coffees Coffee-making equipment and other merchandise
 25
F
Income Statement I
N
14892.2
15469
A
N
13299.5

11512.8 11700.4

10175.8 C
I
A
L
1728.5
1197.4 1384.7
S
1248

-325.4 8.3

2013 2012 2011

Net Revenue Operating Expense
Operating Income Earnings After Interest & Tax
 26
F
Earnings I
N
$1.83 A
$1.66
N
C
$0.89 I
$0.72
$0.56 A
L
$0.01 S
2013 2012 2011
EPS Cash Dividends
 27
F
Balance Sheet I
N
$5,471.40
$6,045.30

$5,377.30
A
$5,114.50

$4,482.30
$4,199.60
N
$4,019.60

C
$1,657.10
$2,209.80 I
$894.90 A
L
2013 2012
Current Assets Fixed Assets Current Liabilities
S
Long Term Liabilities Equity
MARKETING
Segment
Targeting
Positioning
Product
Price
Place
Promotion
 29
M
Segment A
R
Every age group. K
E
Tech savvy individuals. T
Men and women. I
N
High disposable income.
G
Brand focused.

Savvy and avid coffee lovers who enjoy

the “Starbucks Experience”.
 30
M
Target Customer A
R
Starbucks targets commuters and captive K
consumers. E
T
Commuters consist of people heading to or from
work or people on their lunch break. I
N
Captive consumers consist of those who are
stuck in a campus environment.
G
Eg: high school & college students, corporate
campuses.
 31
M
Positioning A
R
Starbucks has positioned itself as an upscale K
brand which provide rich experience. E
T
It is obvious from the mission statement that
they are trying to make it the best for socializing. I
N
Starbucks is trying to reposition itself as a
“third place” for its customers.
G
 32
M
Product A
R
Coffee: More than 30 blends and premium coffees. K
E
Handcrafted Beverages: Fresh-brewed coffee,
hot and iced espresso beverages, Frappuccino
®
T
coffee and non-coffee blended beverages, I
smoothies and Tazo teas.
®

N
Fresh Food: Baked pastries, sandwiches, salads, G
oatmeal, yogurt parfaits and fruit cups.

Merchandise: Coffee- and tea-brewing equipment,

mugs and accessories, packaged goods, music,
books and gifts.
 33
M
Price A
R
Startbucks offers all of its products at a premium K
price. E
T
Prices range from $1.00-$4.20 for drinks which is
higher than any other retailers. I
N
In case of foods, Starbucks is more expensive
when compared to quick-service restaurants,
G
 34
M
Place A
R
Distributed directly to customers through own K
retail stores and retail partners. E
T
Located in high-traffic, high-visibility locations,
focusing on pedestrian consumers. I
N
Company also focus on drive-thru retail stores for
the convenience of non-pedestrian consumers.
G
 35
M
Promotion A
R
K
Starbucks spends under 3% of revenue on ads.
Advertising But spends more on ensuring customer E
satisfaction to increase word of mouth.
T
Personal
Selling
Passionate employees, customer satisfaction. I
N
Events, public performances, green initiatives
Public
philanthropic endeavors. G
Relations

Store decoration, viral videos, sample vans,

Sales billboards, newspaper, magazines and
Promotions social media.
FACTS
Five Facts
 37
F
Five Facts A
C
Starbucks has added an average 15 stores on a daily T
1 basis since 1987.
S
The average Starbucks customer visits the store 6 times
2 per month while loyal 20% of customers visit 16 times.

3 There are over 87000 drink combinations at Starbucks.

The Starbucks cinnamon chip scone has more calories

4
than a McDonald’s quarter pounder with 480 calories.
Starbucks uses 93 million gallons of milk and
5 2.3 billion paper cups per year.
Recognitions
Awards
 39
R
Awards e
c
“No. 1 Best Coffee,” Fast Food and Quick o
Refreshment categories Zagat’s Survey of
National Chain Restaurants – 2009-2010 g
“No. 1 Most Popular Quick Refreshment Chain” n
Zagat’s Survey of National Chain Restaurants
– 2009-2010 i
One of the “World’s Most Ethical Companies”
Ethisphere – 2007-2010
t
One of “The 100 Best Companies to Work For” i
FORTUNE – 1998–2000, 2002–2010

One of the “Most Admired Companies in America”

o
FORTUNE – 2003–2010 n
One of the “Global 100 Most Sustainable
Corporations in the World” Corporate Knights
s
– 2010
 THANKS
Compiled By;
Qamarudheen Thayyil
khamarudheent@gmail.com
+919-6259-234-12
www.starbucks.com