Starbucks’ main individual shareholder is Howard Schultz, the founder of Starbucks. Major institutional shareholders comprise BlackRock, with 7.18%, and The Vanguard Group, with 8.6% ownership. Starbucks follows a heavy-chained businessmodel, where the company-operated stores play a critical role in the company’s long-term strategy, compared to McDonald’s heavy-franchised businessmodel, where the long-term plan is to have over 95% of the stores as franchising.
Starbucks is a retail company that sells beverages (primarily consisting of coffee-related drinks) and food. In 2023, Starbucks had 44% of company-operated stores vs. 56% of licensed stores which might make you think Starbucks is a franchisebusiness, when in reality most of its revenue (nearly 82% in 2023) came from company-operated stores, thus making Starbucks a chain businessmodel.
Starbucks follows a chain business model strategy, where most of its revenue comes from its owned stores. For instance, in 2023, with nearly $36 billion in revenue, most of the revenue came from owned stores ($29.46 billion) compared to franchised stores ($4.51 billion) and other revenue sources ($2 billion). Yet owned stores have higher operational costs compared to franchised stores.
Starbucks follows a chain businessmodel, building its brand through its owned stores. And its owned stores are also where most of the revenue is generated. In addition, the owned stores are a great asset to keep experimenting with new products while maintaining tight control over the customer experience.
In 2023, Starbucks operated 19,592vs. 18,253 licensed stores. Starbucks leverages primarily company-operated stores to keep tight control over product development, branding, distribution, and customer experience. It also leverages licensed stores for better amplification of brand, revenue, and profits.
Starbucks made 60% of its revenue, in 2023, from beverages, followed by other revenue, which accounted for 22% of the total revenue (that comprises packaged and single-serve coffees and teas, plus royalty and licensing revenues, beverage-related ingredients, serve ware, and ready-to-drink beverages, among other items.) and food, which accounted for 18% of the total sales in 2023.
Starbucks’s mission is “to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.” And its vision is to “treat people like family, and they will be loyal and give their all.”
Starbucks is a multinational coffee chain headquartered in Seattle, Washington. It was founded by Jerry Baldwin, Zev Siegl, and Gordon Bowker in 1971. From a single and very humble bean roasting store in Pike Place Market, the company is now a global giant operating over 37,711 stores around the world. This large global footprint obviously increases the competition for Starbucks in many different markets. The coffee industry itself is also highly competitive, with established players including McDonald’s and Dunkin’ Donuts.
Starbucks follows a matrix organizational structure with a combination of vertical and horizontal structures. It is characterized by multiple overlapping chains of command and divisions.
McDonald’s and Starbucks sit in the opposite spectrum of retail business models. Indeed, whereas McDonald’s follows a heavily franchised businessmodel, Starbucks follows a heavy-chained one.
Starbucks highlights its mission as “to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.” And its vision is to “treat people like family, and they will be loyal and give their all.”
Starbucks is a global consumer brand with direct distribution, recognized brands, and products that make it a viable business. Its reliance on the Americas as a primary operating segment makes it a weakness. At the same time, Starbucks faces risks related to coffee beans price volatility. Yet the company still has global expansion opportunities.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
