How Starbucks Became An $80B Business

Summary

Starbucks, a $80 billion coffee giant, has seen impressive growth with nearly 30,000 cafes globally, capturing 57% of the cafe market. Founded in 1971, it evolved from a coffee bean shop to serving beverages, with Howard Schultz's vision of turning it into cafes. Despite challenges like the 2007 financial crash and over-saturation, Starbucks adapted by focusing on customer experience and innovative concepts like Starbucks Reserve Roasteries. It now faces changing consumer preferences, responding with healthier options and delivery services.

Takeaways

• 🌟 Starbucks has grown to a global presence with nearly 30,000 cafes and dominates the cafe market with 57% share.
• 🚀 The company's rapid expansion has led to over 14,000 locations in the U.S., causing profit cannibalization due to over-saturation.
• 💡 Starbucks was founded in 1971 by three friends in Seattle, inspired by the coffee roasting expertise of Alfred Peet.
• ☕ The introduction of espresso-based drinks and the transformation into cafes began after Howard Schultz's visit to Italy in 1983.
• 📈 Schultz's aggressive expansion strategy led to Starbucks going public in 1992 with 165 stores, growing to over 15,000 by 2007.
• 📉 The 2007 financial crisis hit Starbucks hard, causing a halt in growth and a 50% drop in stock price.
• 🛠 Howard Schultz's return as CEO in 2008 focused on improving customer experience and closing underperforming stores.
• 🏪 Starbucks closed all U.S. locations for an afternoon in 2008 for barista retraining to enhance the in-store coffee experience.
• 🍰 The company shifted focus from sugary drinks to lighter options like cold brew and Refreshers to align with changing consumer preferences.
• 🏬 Starbucks plans to open more upscale Starbucks Reserve Roasteries, which are large-format stores designed as tourist destinations.
• 📦 The company is also expanding its delivery service to a quarter of its company-owned stores by mid-2019.

Q & A

How many cafes does Starbucks have worldwide?

Starbucks has nearly 30,000 cafes across the globe.

What percentage of the total cafe market sales does Starbucks account for?

Starbucks sales account for 57 percent of the total cafe market.

How many locations does Starbucks have in the U.S.?

Starbucks has more than 14,000 locations in the U.S. alone.

Who founded Starbucks and when was it founded?

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

Who was Starbucks' mentor and what was his contribution?

Alfred Peet, founder of Peet's Coffee, was Starbucks' mentor. He provided roasted coffee beans and connected them with coffee brokers.

What was the initial focus of Starbucks before Howard Schultz joined?

The initial focus of Starbucks was to bring high-quality beans to consumers who were more accustomed to instant or canned coffee.

What significant change did Howard Schultz bring to Starbucks?

Howard Schultz turned the coffee bean stores into cafes, introducing coffee beverages like lattes.

What was the impact of the 2007 financial crash on Starbucks?

The 2007 financial crash caused Starbucks' rapid growth to screech to a halt and its stock price plummeted by 50 percent.

What measures did Howard Schultz take to improve Starbucks' performance after returning as CEO?

Schultz halted growth, focused on customer experience, shuttered underperforming cafes, laid off baristas, and retrained the staff to enhance the in-store experience.

What is Starbucks doing to address the issue of over-saturation and changing consumer preferences?

Starbucks is closing some stores, focusing on growth in targeted areas, promoting lighter drinks, and introducing new upscale stores like Starbucks Reserve Roasteries.

What is the concept behind Starbucks Reserve Roasteries?

Starbucks Reserve Roasteries are massive stores designed to be a tourist destination where baristas and bartenders experiment with different brewing methods and craft new beverages.