Starbucks Corporation is an American coffee company and coffeehouse chain. Starbucks was founded in Seattle, Washington in 1971. As of 2018, the company operates 28,218 locations worldwide.
Starbucks is considered the main representative of "second wave coffee", initially distinguishing itself from other coffee-serving venues in the US by taste, quality, and customer experience while popularizing darkly roasted coffee. Since the 2000s, third wave coffee makers have targeted quality-minded coffee drinkers with hand-made coffee based on lighter roasts, while Starbucks nowadays uses automated espresso machines for efficiency and safety reasons.
Starbucks locations serve hot and cold drinks, whole-bean coffee, microground instant coffee known as VIA, espresso, caffe latte, full- and loose-leaf teas including Teavana tea products, Evolution Fresh juices, Frappuccino beverages, La Boulange pastries, and snacks including items such as chips and crackers; some offerings (including their annual fall launch of the Pumpkin Spice Latte) are seasonal or specific to the locality of the store. Many stores sell pre-packaged food items, hot and cold sandwiches, and drinkware including mugs and tumblers; select "Starbucks Evenings" locations offer beer, wine, and appetizers. Starbucks-brand coffee, ice cream, and bottled cold coffee drinks are also sold at grocery stores.
Starbucks first became profitable in Seattle in the early 1980s. Despite an initial economic downturn with its expansion into the Midwest and British Columbia in the late 1980s, the company experienced revitalized prosperity with its entry into California in the early 1990s. The first Starbucks location outside North America opened in Tokyo in 1996; overseas properties now constitute almost one-third of its stores. The company opened an average of two new locations daily between 1987 and 2007.
On December 1, 2016, Howard Schultz announced he would resign as CEO effective April 2017 and would be replaced by Kevin Johnson. Johnson assumed the role of CEO on April 3, 2017, and Howard Schultz retired to become Chairman Emeritus effective June 26, 2018.
Video Starbucks
History
Founding
The first Starbucks opened in Seattle, Washington, on March 31, 1971, by three partners who met while they were students at the University of San Francisco: English teacher Jerry Baldwin, history teacher Zev Siegl, and writer Gordon Bowker were inspired to sell high-quality coffee beans and equipment by coffee roasting entrepreneur Alfred Peet after he taught them his style of roasting beans. The company took the name of the chief mate in the book Moby-Dick: Starbuck, after considering "Cargo House" and "Pequod". Bowker recalls that Terry Heckler, with whom Bowker owned an advertising agency, thought words beginning with "st" were powerful. The founders brainstormed a list of words beginning with "st". Someone pulled out an old mining map of the Cascade Range and saw a mining town named "Starbo", which immediately put Bowker in mind of the character "Starbuck". Bowker said, "Moby-Dick didn't have anything to do with Starbucks directly; it was only coincidental that the sound seemed to make sense."
The first Starbucks store was located in Seattle at 2000 Western Avenue from 1971-1976. This cafe was later moved to 1912 Pike Place; never to be relocated again. During this time, the company only sold roasted whole coffee beans and did not yet brew coffee to sell. The only brewed coffee served in the store were free samples. During their first year of operation, they purchased green coffee beans from Peet's, then began buying directly from growers.
Sale and expansion
In 1984, the original owners of Starbucks, led by Jerry Baldwin, purchased Peet's. During the 1980s, total sales of coffee in the US were falling, but sales of specialty coffee increased, forming 10% of the market in 1989, compared with 3% in 1983. By 1986, the company operated six stores in Seattle and had only just begun to sell espresso coffee.
In 1987, the original owners sold the Starbucks chain to former manager Howard Schultz, who rebranded his Il Giornale coffee outlets as Starbucks and quickly began to expand. In the same year, Starbucks opened its first locations outside Seattle at Waterfront Station in Vancouver, British Columbia, and Chicago, Illinois. By 1989, 46 stores existed across the Northwest and Midwest, and annually Starbucks was roasting over 2,000,000 pounds (907,185 kg) of coffee.
At the time of its initial public offering (IPO) on the stock market in June 1992, Starbucks had 140 outlets, with a revenue of US$73.5 million, up from US$1.3 million in 1987. The company's market value was US$271 million by this time. The 12% portion of the company that was sold raised around US$25 million for the company, which facilitated a doubling of the number of stores over the next two years. By September 1992, Starbucks' share price had risen by 70% to over 100 times the earnings per share of the previous year.
In July 2013, over 10% of in-store purchases were made on customer's mobile devices using the Starbucks app. The company once again utilized the mobile platform when it launched the "Tweet-a-Coffee" promotion in October 2013. On this occasion, the promotion also involved Twitter and customers were able to purchase a US$5 gift card for a friend by entering both "@tweetacoffee" and the friend's handle in a tweet. Research firm Keyhole monitored the progress of the campaign and a December 6, 2013, media article reported that the firm had found that 27,000 people had participated and US$180,000 of purchases were made to date.
Expansion to new markets and products
The first Starbucks location outside North America opened in Tokyo, Japan, in 1996. On December 4, 1997, the Philippines became the third market to open outside North America with its first branch in the country located at 6750 Ayala Building in Makati City, Philippines. Starbucks entered the U.K. market in 1998 with the $83 million USD acquisition of the then 56-outlet, UK-based Seattle Coffee Company, re-branding all the stores as Starbucks.
In September 2002, Starbucks opened its first store in Latin America, at Mexico City. Currently, there are over 500 locations in Mexico and there are plans for the opening of up to 850 by 2018.
In 1999, Starbucks experimented with eateries in the San Francisco Bay area through a restaurant chain called Circadia. These restaurants were soon "outed" as Starbucks establishments and converted to Starbucks cafes.
In October 2002, Starbucks established a coffee trading company in Lausanne, Switzerland to handle purchases of green coffee. All other coffee-related business continued to be managed from Seattle.
In April 2003, Starbucks completed the purchase of Seattle's Best Coffee and Torrefazione Italia from AFC Enterprises for $72m. The deal only gained 150 stores for Starbucks, but according to the Seattle Post-Intelligencer, the wholesale business was more significant. In September 2006, rival Diedrich Coffee announced that it would sell most of its company-owned retail stores to Starbucks. This sale included the company-owned locations of the Oregon-based Coffee People chain. Starbucks converted the Diedrich Coffee and Coffee People locations to Starbucks, although the Portland International Airport Coffee People locations were excluded from the sale.
In August 2003, Starbucks opened its first store in South America in Lima, Peru.
In 2007, the company opened its first store in Russia, ten years after first registering a trademark there.
In 2008, they purchased the manufacturer of the Clover Brewing System. They began testing the "fresh-pressed" coffee system at several Starbucks locations in Seattle, California, New York, and Boston.
In early 2008, Starbucks started a community website, My Starbucks Idea, designed to collect suggestions and feedback from customers. Other users comment and vote on suggestions. Journalist Jack Schofield noted that "My Starbucks seems to be all sweetness and light at the moment, which I don't think is possible without quite a lot of censorship". The website is powered by Salesforce.com software.
In May 2008, a loyalty program was introduced for registered users of the Starbucks Card (previously simply a gift card) offering perks such as free Wi-Fi Internet access, no charge for soy milk and flavored syrups, and free refills on brewed drip coffee, iced coffee, or tea. In 2009, Starbucks began beta testing its mobile app for the Starbucks card, a stored value system in which consumers access pre-paid funds to purchase products at Starbucks. Starbucks released its complete mobile platform on January 11, 2011.
On November 14, 2012, Starbucks announced the purchase of Teavana for US$620 million in cash and the deal was formally closed on December 31, 2012.
On February 1, 2013, Starbucks opened its first store in Ho Chi Minh City, Vietnam, and this was followed by an announcement in late August 2013 that the retailer will be opening its inaugural store in Colombia. The Colombian announcement was delivered at a press conference in Bogota, where the company's CEO explained, "Starbucks has always admired and respected Colombia's distinguished coffee tradition."
In August 2014, Starbucks opened their first store in Williamsburg, Brooklyn. This location will be one of 30 Starbucks stores that will serve beer and wine.
In September 2014, it was revealed that Starbucks would acquire the remaining 60.5 percent stake in Starbuck Coffee Japan that it does not already own, at a price of $913.5 million.
In August 2015, Starbucks announced that it will enter Cambodia, its 16th market in the China/Asia Pacific region. The first location will open in the capital city of Phnom Penh by the end of 2015.
In February 2016, Starbucks announced that it will enter Italy, its 24th market in Europe. The first location will open in Milan by 2018. In August, startup company FluxPort introduced Qi inductive charging pads at select locations in Germany.
In September 2016, Starbucks announced a debut of its first-ever original content series called "Upstanders" which aims to inspire Americans with stories of compassion, citizenship, and civility. The series features podcasts, written word, and video, and will be distributed via the Starbucks mobile app, online, and through the company's in-store digital network.
On July 27, 2017, Starbucks acquired the remaining 50% stake in their Chinese venture from long-term joint venture partners Uni-President Enterprises Corporation (UPEC) and President Chain Store Corporation (PCSC).
On March 21, 2018, Starbucks announced that it is considering the use of blockchain technology with an idea to connect coffee drinkers with coffee farmers who eventually can take advantage of new financial opportunities. The pilot program is going to start with farmers in Costa Rica, Colombia and Rwanda in order to develop a new way to track the bean to cup journey.
On June 19, 2018, Starbucks announced the closing of 150 locations in 2019, this is three times the number the corporation typically closes in a year. The closings will happen in urban areas that already have dense clusters of stores.
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Corporate governance
Starbucks' chairman, Howard Schultz, has talked about making sure growth does not dilute the company's culture
Howard Schultz served as the company's CEO until 2000. Orin C. Smith was President and CEO of Starbucks from 2001 to 2005.
In January 2008, Schultz resumed his roles as President and CEO after an eight-year hiatus, replacing Jim Donald, who took the posts in 2005 but was asked to step down after sales slowed in 2007. Schultz aims to restore what he calls the "distinctive Starbucks experience" in the face of rapid expansion. Analysts believe that Schultz must determine how to contend with higher materials prices and enhanced competition from lower-price fast food chains, including McDonald's and Dunkin' Donuts. Starbucks announced it would discontinue the warm breakfast sandwich products they originally intended to launch nationwide in 2008 and refocus on coffee, but they reformulated the sandwiches to deal with complaints and kept the product line.
As of January 2015, the chief operating officer of Starbucks was Troy Alstead, though at that time he announced he was taking an extended leave of absence of undetermined length. Subsequently, Kevin Johnson was appointed to succeed Alstead as president and COO.
In October 2015, Starbucks hired its first Chief Technology Officer, Gerri Martin-Flickinger, to lead their technology team. In April 2017, Schultz became executive chairman of Starbucks with Johnson becoming President and CEO.
Starbucks maintains control of production processes by communicating with farmers to secure beans, roasting its own beans, and managing distribution to all retail locations. Additionally, Starbucks' Coffee and Farmer Equity Practices require suppliers to inform Starbucks what portion of wholesale prices paid reaches farmers.
Products
In 1994, Starbucks bought The Coffee Connection, gaining the rights to use, make, market, and sell the "Frappuccino" beverage. The beverage was introduced under the Starbucks name in 1995 and as of 2012, Starbucks had annual Frappuccinos sales of over $2 billion.
The company began a "skinny" line of drinks in 2008, offering lower-calorie and sugar-free versions of the company's offered drinks that use skim milk, and can be sweetened by a choice of "natural" sweeteners (such as raw sugar, agave syrup, or honey), artificial sweeteners (such as Sweet'N Low, Splenda, Equal), or one of the company's sugar-free syrup flavors. Starbucks stopped using milk originating from rBGH-treated cows in 2007.
In June 2009, the company announced that it would be overhauling its menu and selling salads and baked goods without high fructose corn syrup or artificial ingredients. This move was expected to attract health- and cost-conscious consumers and will not affect prices.
Starbucks introduced a new line of instant coffee packets, called VIA "Ready Brew", in March 2009. It was first unveiled in New York City with subsequent testing of the product also in Seattle, Chicago, and London. The first two VIA flavors include Italian Roast and Colombia, which were then rolled out in October 2009, across the U.S. and Canada with Starbucks stores promoting the product with a blind "taste challenge" of the instant versus fresh roast, in which many people could not tell the difference between the instant and fresh brewed coffee. Analysts speculated that by introducing instant coffee, Starbucks would devalue its own brand.
Starbucks began selling beer and wine at some US stores in 2010. As of April 2012, it is available at seven locations and others have applied for licenses.
In 2011, Starbucks introduced its largest cup size, the Trenta, which can hold 31 ounces. In September 2012, Starbucks announced the Verismo, a consumer-grade single-serve coffee machine that uses sealed plastic cups of coffee grounds, and a "milk pod" for lattes.
On November 10, 2011, Starbucks Corporation announced that it had bought juice company Evolution Fresh for $30 million in cash and planned to start a chain of juice bars starting in around middle of 2012, venturing into territory staked out by Jamba Inc. Its first store released in San Bernardino, California and plans for a store in San Francisco were to be launched in early 2013.
In 2012, Starbucks began selling a line of iced Starbucks Refresher beverages that contain an extract from green arabica coffee beans. The beverages are fruit flavored and contain caffeine but advertised as having no coffee flavor. Starbucks' green coffee extraction process involves soaking the beans in water.
On June 25, 2013, Starbucks began to post calorie counts on menus for drinks and pastries in all of their U.S. stores.
In 2014, Starbucks began producing their own line of "handcrafted" sodas, dubbed "Fizzio".
In 2015, Starbucks began serving coconut milk as an alternative to dairy and soy.
In March 2017, Starbucks announced to launch limited-edition of two new specialty drinks made from beans aged in whiskey barrels at its Seattle roastery. Starbucks' barrel-aged coffee will be sold with a small batch of unroasted Starbucks Reserve Sulawesi beans, which are then hand-scooped into whiskey barrels from Washington D.C.
Tea
Starbucks entered the tea business in 1999 when it acquired the Tazo brand for US$8,100,000. In late 2012, Starbucks paid US$620 million to buy Teavana. As of November 2012, there is no intention of marketing Starbucks' products in Teavana stores, though the acquisition will allow the expansion of Teavana beyond its current main footprint in shopping malls. In January 2015, Starbucks began to roll out Teavana teas into Starbucks stores, both in to-go beverage and retail formats.
Coffee quality
Kevin Knox, who was in charge of doughnuts quality at Starbucks from 1987 to 1993, recalled on his blog in 2010 how George Howell, coffee veteran and founder of the Cup of Excellence, had been appalled at the dark roasted beans that Starbucks was selling in 1990. Talking to the New York Times in 2008, Howell stated his opinion that the dark roast used by Starbucks does not deepen the flavor of coffee, but instead can destroy purported nuances of flavor. The March 2007 issue of Consumer Reports compared American fast-food chain coffees and ranked Starbucks behind McDonald's Premium Roast. The magazine called Starbucks coffee "strong, but burnt and bitter enough to make your eyes water instead of open". As reported by TIME in 2010, third wave coffee proponents generally criticize Starbucks for over-roasting beans.
Other products
In 2012, Starbucks introduced Starbucks Verismo, a line of coffee makers that brew espresso and regular chocolate from coffee capsules, a type of pre-apportioned single-use container of ground coffee and flavorings utilizing the K-Fee pod system. In a brief review of the 580 model, Consumer Reports described the results of a comparative test of the Verismo 580 against two competitive brands: "Because you have to conduct a rinse cycle between each cup, the Verismo wasn't among the most convenient of single-serve machines in our coffeemaker tests. Other machines we've tested have more flexibility in adjusting brew strength--the Verismo has buttons for coffee, espresso, and latte with no strength variation for any type. And since Starbucks has limited its coffee selection to its own brand, there are only eight varieties so far plus a milk pod for the latte."
Locations
The company's headquarters is located in Seattle, Washington, United States, where 3,501 people worked as of January 2015. The main building in the Starbucks complex was previously a Sears distribution center.
Current
As of September 2018, Starbucks is present on 6 continents and in 76 countries and territories, with a total of 27,340 locations
Expansion
In 2008, Starbucks continued its expansion, settling in Argentina, Belgium, Brazil, Bulgaria, the Czech Republic, and Portugal.
European and Scandinavian expansion continued in 2009 with Poland (April), Utrecht, Netherlands (August), and Sweden at Arlanda Airport outside Stockholm (October).
In 2010, growth in new markets continued. In May 2010, Southern Sun Hotels South Africa announced that they had signed an agreement with Starbucks to brew Starbucks coffees in select Southern Sun and Tsonga Sun hotels in South Africa. The agreement was partially reached so Starbucks coffees could be served in the country in time for the 2010 FIFA World Cup hosted by South Africa. In June 2010, Starbucks opened its first store in Budapest, Hungary and in November, the company opened the first Central American store in El Salvador's capital, San Salvador.
In December 2010, Starbucks debuted their first ever Starbucks at sea, where with a partnership with Royal Caribbean International; Starbucks opened a shop aboard their Allure of the Seas Royal Caribbean's second largest ship, and also the second largest ship in the world.
Starbucks is planning to open its fourth African location, after South Africa, Egypt, and Morocco, in Algeria. A partnership with Algerian food company Cevital will see Starbucks open its first Algerian store in Algiers.
In January 2011, Starbucks and Tata Coffee, Asia's largest coffee plantation company, announced plans for a strategic alliance to bring Starbucks to India and also to source and roast coffee beans at Tata Coffee's Kodagu facility. Despite a false start in 2007, in January 2012, Starbucks announced a 50:50 joint venture with Tata Global Beverages called Tata Starbucks. Tata Starbucks will own and operate Starbucks outlets in India as Starbucks Coffee "A Tata Alliance". Starbucks opened its first store in India in Mumbai on October 19, 2012.
In February 2011, Starbucks started selling their coffee in Norway by supplying Norwegian food shops with their roasts. The first Starbucks-branded Norwegian shop opened on February 8, 2012, at Oslo Airport, Gardermoen. In October 2011, Starbucks opened another location in Beijing, China, at the Beijing Capital International Airport's Terminal 3, international departures hall; making the company's 500th store in China. The store is the 7th location at the airport. The company planned to expand to 1,500 stores in China by 2015. In May 2012, Starbucks opened its first coffeehouse in Finland, with the location being Helsinki-Vantaa Airport in Vantaa. Starbucks recently opened a store in San Jose Costa Rica, in 2 popular locations. 1 opened in a mall and the other in Avenida Escazu.
In October 2012, Starbucks announced plans to open 1,000 stores in the United States in the next five years. The same month, the largest Starbucks in the US opened at the University of Alabama's Ferguson Center.
In 2013, Starbucks met with Dansk Supermarked, which is the biggest retail company in Denmark. The first Starbucks inside Dansk Supermarked opened in August 2013 in the department stores Salling in Aalborg and Aarhus.
Starbucks has announced its first café in Bolivia would open in 2014 in Santa Cruz de la Sierra and the first in Panama in 2015.
On June 19, 2015, a Starbucks opened at Disney's Animal Kingdom on Discovery Island. Since the park does not allow plastic straws due to the animals, this location features special green eco-friendly straws with their cold drinks. This was the sixth Starbucks to open in Walt Disney World, following locations in the Magic Kingdom (Main Street, U.S.A.), Epcot (Future World), Disney's Hollywood Studios (Hollywood Boulevard), and two in Disney Springs (Marketplace and West Side). In addition to these six, there are locations in Disneyland (Main Street, U.S.A.), Disney California Adventure (Buena Vista Street), Anaheim's Downtown Disney, and Disney Village at Disneyland Paris. The Downtown Disney and Disney Springs locations are Starbucks-operated, while the locations inside of the theme parks are Disney-operated.
Bill Sleeth, Starbucks' vice president of global design, has overseen efforts to make a neighborhood feel for new stores, saying "What you don't want is a customer walking into a store in downtown Seattle, walking into a store in the suburbs of Seattle and then going into a store in San Jose, and seeing the same store." Sleeth said "The customers were saying, 'Everywhere I go, there you are,' and not in a good way. We were pretty ubiquitous." As part of a change in compact direction, Starbucks management wanted to transition from the singular brand worldwide to focusing on locally relevant design for each store.
Starbucks' first Channel Island store was opened in early 2015, in the primary business area of St Peter Port in Guernsey.
In 2014 Starbucks was scheduled to open a store in Azerbaijan, in the Port Baku Mall.
In August 2013, Starbucks' CEO, Howard Schultz, personally announced the opening of Starbucks stores in Colombia. The first café was set to open in 2014 in Bogotá and add 50 more stores throughout Colombia's main cities in a 5-year limit. Schultz also stated that Starbucks will work with both the Colombian Government and USAID to continue "empowering local coffee growers and sharing the value, heritage and tradition of its coffee with the world." Starbucks noted that the aggressive expansion into Colombia was a joint venture with Starbucks' Latin partners, Alsea and Colombia's Grupo Nutresa that has previously worked with Starbucks by providing coffee through Colcafe. This announcement comes after Starbucks' Farmer Support Center was established in Manizales, Colombia the previous year making Colombia an already established country by the corporation.
On April 21, 2015, Kesko, the second largest retailer in Finland, announced its partnership with Starbucks, with stores opened next to K-Citymarket hypermarkets. As of June 2017, 3 stores had been opened next to K-Citymarkets: In Sello in Espoo and in Myyrmanni and Jumbo in Vantaa.
On December 18, 2015, Starbucks opened in Almaty, Kazakhstan. On the next day, 1 more coffee shop was opened.
The first Starbucks store in Slovakia opened in Aupark Shopping Center in Bratislava on May 31, 2016, with two more stores confirmed to open in Bratislava by the end of 2016.
In February 2016, Howard Schultz announced the opening of stores in Italy. The first Italian Starbucks store will open in Milan in 2017, later delayed to September 6, 2018.
After Taste Holdings acquired outlet licensing for South African stores, Starbucks opened its first store in South Africa in Rosebank, Johannesburg on Thursday, April 21, 2016, and its second in the country at the end of April in Mall of Africa.
In May 2017, Starbucks announced it was commencing operations in Jamaica, where the first store is to open in the resort city of Montego Bay. The company announced that its first store would be on located on the shores of the world-famous Doctor's Cave Beach, offering views of the Caribbean Sea. Starbucks Jamaica expects thereafter to roll out a further 14 locations across the island by the year 2020. The company also reaffirmed its commitment to working with local coffee farmers to "implement systems to increase productivity and yields, while also increasing compliance to international standards." Starbucks Jamaica officially opened its first store on November 21, 2017, with plans to open 15 locations islandwide over a 5-year period. Starbucks Jamaica, recently opened its 3 stores at the Sangster International Airport in Montego Bay and one at the Historic Falmouth Pier, in Falmouth, Jamaica. Starbucks Jamaica announced its intention to open 2 stores in Jamaica's capital city, Kingston in 2018, with plans for up to 6 stores by 2019. The first of the Kingston stores opened on June 21, 2018. The second store is located in the heart of Kingston's central business district, New Kingston. Starbucks is also opening its first in-store location in the new flagship location for Jamaica's largest Pharmacy chain, Fontana Pharmacy, also located in Kingston; making it Starbucks' third confirmed location. This location will open in July 2019.
Caribbean Coffee Baristas, franchise-holders for Starbucks' Jamaican operations are set to open new stores in the Cayman Islands and the Turks and Caicos Islands; up to three stores are planned for the Caymans and a yet undisclosed number for the Turks & Caicos. The first of these stores will be opened by year-end of 2018.
At the end of December in 2017, the world biggest Starbucks store opened in Shanghai, China.
Starbucks announced the opening of stores in Serbia in late 2018. The first store is expected to open in Belgrade.
Former
In 2003, after struggling with fierce local competition, Starbucks, along with its partner Delek Group of Israel, closed all six of its locations in Israel, citing "on-going operational challenges" and a "difficult business environment."
The Starbucks location in the former imperial palace in Beijing closed in July 2007. The coffee shop had been a source of ongoing controversy since its opening in 2000 with protesters objecting that the presence of the American chain in this location "was trampling on Chinese culture."
In July 2008, the company announced it was closing 600 underperforming company-owned stores and cutting U.S. expansion plans amid growing economic uncertainty. On July 29, 2008, Starbucks also cut almost 1,000 non-retail jobs as part of its bid to re-energize the brand and boost its profit. Of the new cuts, 550 of the positions were layoffs and the rest were unfilled jobs. These closings and layoffs effectively ended the company's period of growth and expansion that began in the mid-1990s.
Starbucks also announced in July 2008 that it would close 61 of its 84 stores in Australia in the following month. Nick Wailes, an expert in strategic management of the University of Sydney, commented that "Starbucks failed to truly understand Australia's cafe culture." In May 2014, Starbucks announced ongoing losses in the Australian market, which resulted in the remaining stores being sold to the Withers Group.
In January 2009, Starbucks announced the closure of an additional 300 underperforming stores and the elimination of 7,000 positions. CEO Howard Schultz also announced that he had received board approval to reduce his salary. Altogether, from February 2008 to January 2009, Starbucks terminated an estimated 18,400 U.S. jobs and began closing 977 stores worldwide.
In August 2009, Ahold announced closures and rebranding for 43 of their licensed store Starbucks kiosks for their US based Stop & Shop and Giant supermarkets.
In July 2012, the company announced that they may begin closing unprofitable European stores immediately.
Unbranded stores
In 2009, at least three stores in Seattle were de-branded to remove the logo and brand name, and remodel the stores as local coffee houses "inspired by Starbucks." CEO Howard Schultz says the unbranded stores are a "laboratory for Starbucks". The first, 15th Avenue Coffee and Tea, opened in July 2009 on Capitol Hill. It served wine and beer and hosted live music and poetry readings. It has since been remodeled and reopened as a Starbucks-branded store. Another is Roy Street Coffee and Tea at 700 Broadway E., also on Capitol Hill. Although the stores have been called "stealth Starbucks" and criticized as "local-washing", Schultz says that "It wasn't so much that we were trying to hide the brand, but trying to do things in those stores that we did not feel were appropriate for Starbucks."
Licensed and franchise operations
Independently operated Starbucks locations exist. Stores that independently operate locations include Ahold Delhaize, Barnes & Noble, Target, Albertsons, and more recently, Publix stores. As of 2015, 4,962 licensed locations exist.
In the EMEA (Europe, Middle East, and Africa) markets, Starbucks holds a franchising program. Different to the License program in which existing corporations may apply to operate a Starbucks kiosk within an existing store, Franchises have the ability to create new freestanding stores.
Automated locations
Starbucks has automated systems in some areas. These machines have 280 possible drink combinations to choose from. They have touchscreens and customers can play games while they wait for their order.
Facilities
Free Wi-Fi Internet access varies in different regions. In Germany, customers get unlimited free Wi-Fi through BT Openzone, and in Switzerland and Austria, customers can get 30 minutes with a voucher card (through T-Mobile).
Since 2003, Starbucks in the UK rolled out a paid Wi-Fi based on one-time, hourly or daily payment. Then, in September 2009, it was changed to a 100% free Wi-Fi at most of its outlets. Customers with a Starbucks Card are able to log-on to the Wi-Fi in-store for free with their card details, thereby bringing the benefits of the loyalty program in-line with the United States. Since July 2010, Starbucks has offered free Wi-Fi in all of its US stores via AT&T and information through a partnership with Yahoo!. This is an effort to be more competitive against local chains, which have long offered free Wi-Fi, and against McDonald's, which began offering free wireless internet access in 2010. On June 30, 2010, Starbucks announced it would begin to offer unlimited and free Internet access via Wi-Fi to customers in all company-owned locations across Canada starting on July 1, 2010.
In October 2012, Starbucks and Duracell Powermat announced a pilot program to install Powermat charging surfaces in the tabletops in selected Starbucks stores in the Boston area. Furthermore, Starbucks announced its support in the Power Matters Alliance (PMA) and its membership in the PMA board, along with Google and AT&T, in an effort to create "a real-world ecosystem of wireless power" through a universal wireless charging standard that customers could use to recharge smartphones.
Starbucks launched a new Mobile Order & Pay app in Portland, Oregon on December 2015. This includes a bar code in mobile. This bar code needs to be scanned by a small scanner at the counter. Customers can pay from their smartphone by just waving their phone off the scanner. In one-quarter, 16% of transactions were made through this mobile app.
Advertising
Logo
In 2006, Valerie O'Neil, a Starbucks spokeswoman, said that the logo is an image of a "twin-tailed mermaid, or siren as she's known in Greek mythology". The logo has been significantly streamlined over the years. In the first version, the Starbucks siren was topless and had a fully visible double fish tail. The image also had a rough visual texture and has been likened to a melusine. The image is said by Starbucks to be based on a 16th-century "Norse" woodcut, although other scholars note that it is apparently based on a 15th-century woodcut in J.E. Cirlot's Dictionary of Symbols.
In the second version, which was used from 1987-92, her breasts were covered by her flowing hair, but her navel was still visible. The fish tail was cropped slightly, and the primary color was changed from brown to green, a nod to the Alma Mater of the three founders, the University of San Francisco. In the third version, used between 1992 and 2011, her navel and breasts are not visible at all, and only vestiges remain of the fish tails. The original "woodcut" logo has been moved to the Starbucks' Headquarters in Seattle.
At the beginning of September 2006 and then again in early 2008, Starbucks temporarily reintroduced its original brown logo on paper hot-drink cups. Starbucks has stated that this was done to show the company's heritage from the Pacific Northwest and to celebrate 35 years of business. The vintage logo sparked some controversy due in part to the siren's bare breasts, but the temporary switch garnered little attention from the media. Starbucks had drawn similar criticism when they reintroduced the vintage logo in 2006. The logo was altered when Starbucks entered the Saudi Arabian market in 2000 to remove the siren, leaving only her crown, as reported in a Pulitzer Prize-winning column by Colbert I. King in The Washington Post in 2002. The company announced three months later that it would be using the international logo in Saudi Arabia.
In January 2011, Starbucks announced that they would make small changes to the company's logo, removing the Starbucks wordmark around the siren, enlarging the siren image, and making it green.
Partnerships
Starbucks has agreed to a partnership with Apple to collaborate on selling music as part of the "coffeehouse experience". In October 2006, Apple added a Starbucks Entertainment area to the iTunes Store, selling music similar to that played in Starbucks stores. In September 2007, Apple announced that customers would be able to browse the iTunes Store at Starbucks via Wi-Fi in the US--with no requirement to log into the Wi-Fi network--targeted at iPhone, iPod touch, iPad, and MacBook users. The iTunes Store will automatically detect recent songs playing in a Starbucks and offer users the opportunity to download the tracks. Some stores feature LCD screens with the artist name, song, and album information of the current song playing. This feature has been rolled out in Seattle, New York City, and the San Francisco Bay Area, and was offered in limited markets during 2007-2008. During the fall of 2007, Starbucks also began to sell digital downloads of certain albums through iTunes. Starbucks gave away 37 different songs for free download through iTunes as part of the "Song of the Day" promotion in 2007, and a "Pick of the Week" card is now available at Starbucks for a free song download. Since 2011, Starbucks also gives away a "Pick of the Week" card for app downloads from the App Store. A Starbucks app is available in the iPhone App Store.
Starting on June 1, 2009, the MSNBC morning news program Morning Joe has been presented as "brewed by Starbucks" and the show's logo changed to include the company logo. Although the hosts have previously consumed Starbucks coffee on air "for free" in the words of MSNBC president Phil Griffin, it was not paid placement at that time. The move was met with mixed reactions from rival news organizations, viewed as both a clever partnership in an economic downturn and a compromise of journalistic standards.
Starbucks and Kraft Foods entered into a partnership in 1998 to sell Starbucks products in the Mondelez grocery stores owned by the latter. Starbucks claimed that Kraft did not sufficiently promote its products and offered Kraft US$750 million to terminate the agreement; however, Kraft declined the offer, but Starbucks proceeded with the termination anyway. Starbucks wanted to terminate the agreement because at the time, single coffee packs were beginning to become popular. In their agreement, Starbucks was confined to selling packs that only worked in Kraft's Tassimo machines. Starbucks didn't want to fall behind in the market opportunities for k cups. In mid-November 2013, an arbitrator ordered Starbucks to pay a fine of US$2.8 billion to Kraft spin-off Mondelez International for its premature unilateral termination of the agreement.
In June 2014, Starbucks announced a new partnership with Arizona State University (ASU) that would allow Starbucks employees in their Junior and Senior years of college to complete four years of college at Arizona State University's online program for only around 23K. Starbucks employees admitted into the program will receive a scholarship from the college, College Achievement Plan (CAP), that will cover 44% of their tuition. The remaining balance and all other expenses would be paid by the student or through traditional financial aid. In April 2015, Starbucks and ASU announced an expansion of the College Achievement Program. The program would now allow all eligible part-time and full-time employees working in a U.S. Starbucks to enroll in the program for full-tuition reimbursement. After the completion of each semester, Starbucks reimburses the student their portion of the tuition. The student can then use the reimbursement to pay any loans or debt incurred during the semester.
In 2015, Starbucks signed a deal with PepsiCo to market and distribute Starbucks products in several Latin American countries for 2016.
In May 2015, Starbucks entered a partnership with music streaming service Spotify. The partnership entailed giving U.S.-based employees a Spotify premium subscription and to help influence the music played in store via playlists made using Spotify. Starbucks was also given its own curated Spotify playlist to be featured on Spotify's mobile app.
Parodies and infringements
Starbucks has been a target of parodies and imitations of its logo, particularly the 1992 version, and has used legal action against those it perceives to be infringing on its intellectual property. In 2000, San Francisco cartoonist Kieron Dwyer was sued by Starbucks for copyright and trademark infringement after creating a parody of its siren logo and putting it on the cover of one of his comics; later placing it on coffee mugs, T-shirts, and stickers that he sold on his website and at comic book conventions. Dwyer felt that since his work was a parody it was protected by his right to free speech under U.S. law. The case was eventually settled out of court, as Dwyer claimed he did not have the financial ability to endure a trial case with Starbucks. The judge agreed that Dwyer's work was a parody and thus enjoyed constitutional protection; however, he was forbidden from financially "profiting" from using a "confusingly similar" image of the Starbucks siren logo. Dwyer was allowed to display the image as an expression of free speech, but he can no longer sell it. In a similar case, a New York store selling stickers and T-shirts using the Starbucks logo with the phrase "Fuck Off" was sued by the company in 1999. An anti-Starbucks website, starbuckscoffee.co.uk, which encouraged people to deface the Starbucks logo was transferred to Starbucks in 2005, but has since resurfaced at www.starbuckscoffee.org.uk. Christian bookstores and websites in the US are selling a T-shirt featuring a logo with the siren replaced by Jesus and the words "Sacrificed for me" around the edge.
Other successful cases filed by Starbucks include the case won in 2006 against the chain Xingbake in Shanghai, China for trademark infringement, because the chain used a green-and-white circular logo with a name that sounded phonetically similar to the Chinese for Starbucks. Starbucks did not open any stores after first registering its trademark in Russia in 1997 and in 2002 a Russian lawyer successfully filed a request to cancel the trademark. He then registered the name with a Moscow company and asked for $600,000 to sell the trademark to Starbucks, but was ruled against in November 2005.
In 2003, Starbucks sent a cease-and-desist letter to "HaidaBucks Coffee House" in Masset, British Columbia, Canada. The store was owned by a group of young Haida men, who claimed that the name was a coincidence, due to "buck" being a Haida word for "young man" (a claim that cannot be substantiated). After facing criticism, Starbucks dropped its demand after HaidaBucks dropped "coffee house" from its name. Sam Buck Lundberg, who owns a coffee store in Oregon, was prohibited from using "Sambuck's Coffee" on the shop front in 2006. Starbucks lost a trademark infringement case against a smaller coffee vendor in South Korea that operates coffee stations under the name Starpreya. The company, Elpreya, says Starpreya is named after the Norse goddess, Freja, with the letters of that name changed to ease pronunciation by Koreans. The court rejected Starbucks' claim that the logo of Starpreya is too similar to their own logo. A bar owner in Galveston, Texas, USA won the right to sell "Star Bock Beer" after a lawsuit by Starbucks in 2003 after he registered the name, but the 2005 federal court ruling also stated that the sale of the beer must be restricted to Galveston, a ruling upheld by the Supreme Court in 2007.
Ongoing cases include a dispute over the copyright application for Seattle's Rat City Rollergirls logo in 2008. The company claimed the roller derby league's logo by a Washington artist was too similar to its own. Starbucks requested an extension to further examine the issue and possibly issue a complaint, which was granted by the Trademark Office. The July 16, 2008, deadline passed without action by the corporation.
Starbucks launched action against an Indian cosmetics business run by Shahnaz Husain, after she applied to register the name Starstruck for coffee and related products. She said she aimed to open a chain of stores that would sell coffee and chocolate-based cosmetics. A cafe in Al-Manara Square, Ramallah, Palestinian Territories, opened in 2009 with the name "Stars and Bucks" and a logo using a similar green circle and block lettering. Like Starbucks, the Stars and Bucks serves cappuccinos in ceramic cups, and offers free Wifi. According to speculation cited in the Seattle Post Intelligencer, the cafe's name and imitation Starbucks style may be a political satire of American consumerism. Starbucks is not known to have taken action against this business.
In 2014, Nathan Fielder, a Canadian comedian behind the hit show Nathan for You, opened a store called "Dumb Starbucks Coffee" in Los Feliz, Los Angeles CA. The store resembled a typical Starbucks with one exception: everything was preceded by the word "dumb." For example, the drinks he carried included Dumb Skinny Vanilla Lattes and Dumb Frapuccinos. The store carried music titled "Dumb Jazz Standards" and "Dumb Norah Jones Duets." He thought he could bypass infringement and copyright claims through the "Parody Law", referring to the parody aspect of Fair Use laws (that protect parodists such as "Weird Al" Yankovic and SNL). No lawsuits were filed though because the store was short-lived. The Los Angeles Health Department shut it down after 4 days because Fielder lacked the proper permits.
Others have used the Starbucks logo unaltered and without permission, such as a café in Pakistan that used the logo in 2003 in its advertisements and a cafe in Cambodia in 2009, the owner saying that "whatever we have done we have done within the law".
Environmental impact
In 1999, Starbucks started "Grounds for your Garden" to make their business environmentally friendlier. This gives leftover coffee grounds to anyone requesting it for composting. Although not all stores and regions participate, customers can request and lobby their local store to begin the practice.
In 2004, Starbucks began reducing the size of their paper napkins and store garbage bags, and lightening their solid waste production by 816.5 t (1,800,000 lb). In 2008, Starbucks was ranked No.15 on the U.S. Environmental Protection Agency's list of Top 25 Green Power Partners for purchases of renewable energy.
In October 2008, The Sun newspaper reported that Starbucks was wasting 23.4 million liters (6.2 million US gal) of water a day by leaving a tap constantly running for rinsing utensils in a 'dipper well' in each of its stores, but this is often required by governmental public health code.
In June 2009, in response to concerns over its excessive water consumption, Starbucks re-evaluated its use of the dipper well system. In September 2009, company-operated Starbucks stores in Canada and the United States successfully implemented a new water saving solution that meets government health standards. Different types of milk are given a dedicated spoon that remains in the pitcher and the dipper wells were replaced with push button metered faucets for rinsing. This will reportedly save up to 150 US gal (570 l) of water per day in every store.
Recycling
Starbucks began using 10% recycled paper in its beverage cups in 2006--the company claimed that the initiative was the first time that recycled material had been used in a product that came into direct contact with a food or beverage. Allen Hershkowitz of the Natural Resources Defense Council called the 10% content "minuscule", but Starbucks received the National Recycling Coalition Recycling Works Award in 2005 for the initiative.
In a 2008 media article, Starbucks' vice president of corporate social responsibility acknowledged that the company continued to struggle with environmental responsibility, as none of its cups were recyclable and stores did not have recycling bins. At the time that the article was published, Starbucks gave customers who brought in their own reusable cup a 10-cent discount, in addition to using corrugated cup sleeves made from 85 percent post-consumer recycled fiber, which is 34 percent less paper than the original. During the same period, Starbucks entered into a partnership with Conservation International--pledging US$7.5 million over three years--to help protect the natural environment of coffee-growing communities in Mexico and Indonesia.
Farmer equity practices
Starbucks began drafting plans for corporate social responsibility in 1994. Since Starbucks has partnered with Conservation International (CI) to draft plans and audit its coffee and farmer equity (C.A.F.E.) program, Starbucks' C.A.F.E. practices are based on a rating system of 249 indicators. Farmers who earn high overall scores receive higher prices than those who achieve lower scores. Ratings categories include economic accountability, social responsibility, environmental leadership in coffee growing and processing. Indicators for social responsibility have evolved and now include 'zero tolerance' indicators that require workers to be paid in cash, check, or direct deposit, ensure that all workers are paid the established minimum wage, that workplaces are free of harassment and abuse, that workplaces are nondiscriminatory and do not employ persons under the age of 14, and several more.
Starbucks has moved 90% of its coffee purchases to preferred C.A.F.E. certified providers, and the company is approaching its stated goal to purchase 100% of its coffee through C.A.F.E. or other 'ethically sourced' certification systems.Washington State University Assistant Professor Daniel Jaffee argues that Starbucks' C.A.F.E. practices merely 'green wash' "to burnish their corporate image." Additionally, Professor Marie-Christine Renard of Rural Sociology of Chapingo University in Mexico wrote a case study of Starbucks', Conservation International's, and Agro-industries United of Mexico (AMSA) joint conservation effort in Chiapas, Mexico in which she concluded that "[w]hile the CI-Starbucks-AMSA Alliance paid better prices, it did not allow the producers to appropriate the knowledge that was necessary for the organizations to improve the quality of their coffee."
Fair trade
In 2000, the company introduced a line of fair trade products. Of the approximately 136,000 metric tons (300 million pounds) of coffee Starbucks purchased in 2006, only about 6% was certified as fair trade.
According to Starbucks, they purchased 2,180 metric tons (4.8 million pounds) of Certified Fair Trade coffee in fiscal year 2004 and 5,220 metric tons (11.5 million pounds) in 2005. They have become the largest buyer of Certified Fair Trade coffee in North America (10% of the global market). Transfair USA.
All espresso roast sold in the UK and Ireland is Fairtrade. Questions have been raised regarding the legitimacy of the Fair Trade designation.
Groups such as Global Exchange are calling for Starbucks to further increase its sales of fair trade coffees.
According to Starbucks, in 2004 it paid on average $1.42 per pound ($2.64 kg) for high-quality coffee beans, 74% above the commodity prices at the time.
After a long-running dispute between Starbucks and Ethiopia, Starbucks agreed to support and promote Ethiopian coffees. An article in BBC NEWS, states that Ethiopian ownership of popular coffee designations such as Harrar and Sidamo is acknowledged, even if they are not registered. Ethiopia fought hard for this acknowledgement mainly to help give its poverty-stricken farmers a chance to make more money. Unfortunately, this has not been the case. In 2006, Starbucks says it paid $1.42 per pound for its coffee. The coffee Starbucks bought for $1.42 per pound, had a selling price--after transportation, processing, marketing, store rentals, taxes, and staff salary and benefits--of $10.99 per pound. As of August 2010, the Starbucks website sells only one Ethiopian coffee, which it says is new.
In addition, Starbucks is an active member of the World Cocoa Foundation.
Ethos water
Ethos, a brand of bottled water acquired by Starbucks in 2003, is sold at locations throughout North America. Ethos bottles feature prominent labeling stating "helping children get clean water", referring to the fact that US$0.05 from each US$1.80 bottle sold (US$0.10 per bottle in Canada) is used to fund clean water projects in under-developed areas. Although sales of Ethos water have raised over US$6,200,000 for clean water efforts, the brand is not incorporated as a charity. Critics have argued that the claim on the label misleads consumers into thinking that Ethos is primarily a charitable organization when it is actually a for-profit brand and the vast majority of the sale price (97.2%) does not support clean-water projects.
The founders of Ethos have stated that the brand is intended to raise awareness of third-world clean water issues and provide socially responsible consumers with an opportunity to support the cause by choosing Ethos over other brands. Starbucks has since redesigned the American version of the Ethos water bottles, stating the amount of money donated per bottle in the description.
Food bank donations
Since 2010, Starbucks has been donating leftover pastries in the United States to local food banks through a food collection service named Food Donation Connection.
In March 2016, Starbucks unveiled a five-year plan to donate 100 percent of unsold food from its 7,600 company-operated stores in the U.S. to local food banks and pantries. Perishable food will be transported in refrigerated trucks to area food banks through the company's partnerships with the Food Donation Connection and Feeding America. This program, called FoodShare, is expected to provide up to 50 million meals over the next five years.
As of 2017, the program was in 10 different markets, including New York City. In New York, Starbucks works with Feeding America and City Harvest, both non-profits, to donate food from 45 locations. It plans to expand the program to all 305 Manhattan stores.
Controversies
Starbucks has been accused of selling unhealthy products, and has been the target of multiple controversies.
Boycotts
Starbucks chairman and CEO, Howard Schultz, was born to a Jewish family. Despite this, during several calls to boycott, Starbucks stated that neither they nor Schultz personally support the Israeli Government or the Israeli Defence Force. Starbucks also reiterated that they did not close the Israeli locations due to political reasons, but due to market challenges.
In 2006, 2009, 2010 and 2014 when fighting in Israel has worsened, there were several calls to boycott Starbucks for supporting Israel. These calls for boycott of Starbucks stores and products were also based on what has been wrongly claimed, that Starbucks sends part of its profits to the Israeli military, but such allegations are based on a hoax letter attributed to the President, Chairman, and CEO of Starbucks Howard Schultz, who supports Israel's right to exist. He is a recipient of several Israeli awards including "The Israel 50th Anniversary Tribute Award" for "playing a key role in promoting a close alliance between the United States and Israel".
The hoax letter claiming that Schultz had donated money to the Israeli military was actually written by an Australian weblogger, Andrew Winkler, who has admitted fabricating the document. Starbucks responded to these claims, widely circulated on the internet, stating that "Neither Chairman Howard Schultz nor Starbucks fund support the Israeli Army. Starbucks is a non-political organization and does not support individual political causes". The protests against Starbucks derived from the Winkler letter were not the first; earlier protests occurred in June 2002 in Cairo, Dubai and Beirut universities in response to Schultz's criticism of Yasser Arafat. Starbucks has been a regular target of activists protesting against Israel's role in the Gaza War over the claims.
Organizations have urged a boycott of Starbucks, accusing Starbucks of serving as an ally of Israeli militarists. Starbucks was forced to close a store in Beirut, Lebanon due to demonstrators shouting anti-Israel slogans and causing customers to flee. Demonstrators hung several banners on the shop's window and used white tape to paste a Star of David over the green-and-white Starbucks sign. They also distributed a letter saying, Schultz "...is one of the pillars of the American Jewish lobby and the owner of the Starbucks," which they said donates money to the Israeli military.
On January 2009, two Starbucks stores in London were the target of vandalism by pro-Palestinian demonstrators who broke windows and reportedly ripped out fittings and equipment after clashes with riot police.
Music, film, and television
Hear Music is the brand name of Starbucks' retail music concept. Hear Music began as a catalog company in 1990, adding a few retail locations in the San Francisco Bay Area. Hear Music was purchased by Starbucks in 1999. Nearly three years later, in 2002, they produced a Starbucks opera album, featuring artists such as Luciano Pavarotti, followed in March 2007 by the hit CD "Memory Almost Full" by Paul McCartney, making McCartney the first artist signed to the new Hear Music label sold in Starbucks outlets. Its inaugural release was a big non-coffee event for Starbucks the first quarter of 2007.
In 2006, the company created Starbucks Entertainment, one of the producers of the 2006 film Akeelah and the Bee. Retail stores advertised the film before its release and sold the DVD.
Starbucks has become the subject of a protest song, "A Rock Star Bucks a Coffee Shop" by Neil Young and his band, Promise of the Real. The single from Young's album, The Monsanto Years aims at Starbucks' alleged use of genetically modified food, but also at the GMO company Monsanto. By May 31, 2015, the song was Video of the week on the Food Consumer website.
See also
- Coffee culture
- List of coffee companies
- List of coffeehouse chains
- List of companies based in Seattle
- Multinational corporation
References
Further reading
- Behar, Howard with Janet Goldstein. (2007). It's Not About the Coffee: Leadership Principles from a Life at Starbucks, 208 pages. ISBN 1-59184-192-5.
- Clark, Taylor. (2007). Starbucked: A Double Tall Tale of Caffeine, Commerce and Culture. 336 pages. ISBN 0-316-01348-X.
- Michelli, Joseph A. (2006). The Starbucks experience: 5 principles for turning ordinary into extraordinary, 208 pages. ISBN 0-07-147784-5.
- Pendergrast, Mark (2001) [1999]. Uncommon Grounds: The History of Coffee and How It Transformed Our World. London: Texere. ISBN 1-58799-088-1.
- Schultz, Howard. and Dori Jones Yang. (1997). Pour Your Heart Into It: How Starbucks Built a Company One Cup at a Time, 350 pages. ISBN 0-7868-6315-3.
- Simon, Bryant. (2009). Everything but the Coffee: Learning about America from Starbucks. 320 pages. ISBN 0-520-26106-2.
External links
- Official website
- Starbucks Store
- Media related to Starbucks at Wikimedia Commons
Source of article : Wikipedia
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