Who Owns Starbucks?

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 business model, where the company-operated stores play a critical role in the company’s long-term strategy, compared to McDonald’s heavy-franchised business model, where the long-term plan is to have over 95% of the stores as franchising.

Background

Starbucks – officially Starbucks Corporation – is a multinational chain of cafés and roasteries that is headquartered in Seattle, Washington, USA.

The company is now the largest such business in the world with more than 32,000 stores in 80 countries.

Founders

Starbucks was founded by Gordon Bowker, Jerry Baldwin, and Zev Siegl, with the first store opening in 1971 at Seattle’s historic Pike Place market.

The company’s name was inspired by Herman Melville’s tale Moby Dick and a character called Starbuck who embodied the seafaring tradition of early coffee traders.

The trio were peers from the University of San Francisco who shared a passion for coffee and tea, but it was entrepreneur Alfred Peet who inspired them to open a store.

Peet, the founder of Peet’s Coffee & Tea in California, showed them how to roast beans and told of his extensive experience in importing fine arabica beans into the United States during the 1950s.

The narrow Pike Place store offered fresh-roasted coffee, tea, and spices from around the world, and, by the early 1980s, four more stores had opened in the Seattle area. Siegl left the company in 1980 to pursue other interests.

Howard Schultz

Howard Schultz first learned of Starbucks whilst employed at homeware and kitchenware maker Hammarplast.

As one of the company’s sales reps, he noticed that Hammarplast was supplying Starbucks with a substantial number of drip coffee machines.

Intrigued by the large orders, Schultz decided to visit one of the company’s cafés. He first walked into a Starbucks café in 1981 and was immediately captivated by the company’s coffee.

Twelve months later, he joined Starbucks as director of retail operations and marketing.

In 1983, Schultz traveled to Italy on a business trip to explore the country’s coffee culture. While in Milan, he was struck by the importance of coffee in Italian society and the role of the coffee bar as a social gathering place.

Schultz observed that Italian coffee bars served high-quality espresso drinks and fostered a sense of community among their patrons.

He also noticed that the baristas had a deep knowledge and passion for coffee and took pride in their work.

Ultimately, Schultz believed that a similar concept could work in the United States with stores that would serve as a place for people to relax aside from work and the home.

Starbucks is sold

Bowker and Baldwin were opposed to the idea and did not want to deviate from the core business model of selling coffee and related equipment.

In response, Schultz left Starbucks in 1985 to start a coffee chain called Il Giornale.

The chain was an instant success and quickly expanded into other cities such as Chicago and Vancouver. Each Il Giornale café offered brewed coffee and espresso, with consumers praising the company for the warmth and artistry of its Italian-inspired coffee culture.

Bowker and Baldwin later agreed to sell the company to Schultz who purchased the Starbucks name and assets for $3.8 million in March 1987.

Il Giornale became the Starbucks Coffee Company later that year.

Schultz’s leadership

Under Schultz’s leadership, Starbucks became known for its premium coffee, cozy atmosphere, and experienced, friendly customer service.

He was later joined by VP of sales and marketing Howard Behar in 1989 and CFO Orin Smith in 1990. This new Starbucks trio worked closely for many years and was often referred to as “H2O” (two Howards and one Orin).

The company held an IPO in 1992 with the first store outside North America opening in Tokyo in 1996.

Schultz stepped down as CEO in 2000 and over the next few years, Starbucks acquired several competitors including Seattle’s Best Coffee, Torrefazione Italia, and Diedrich Coffee.

In 2008, the company launched the now-famous My Starbucks Idea community site where customers were able to provide suggestions or feedback and vote on the most popular ideas. Schultz returned to the CEO role in 2008 to help Starbucks navigate the GFC with mass layoffs and multiple acquisitions of beverage companies.

Key takeaways

Starbucks – officially Starbucks Corporation – is a multinational chain of cafés and roasteries that is headquartered in Seattle, Washington, USA. The company is now the largest such business in the world with more than 32,000 stores in 80 countries.
Howard Schultz first learned of Starbucks whilst employed at homeware and kitchenware maker Hammarplast. As one of the company’s sales reps, he noticed that Hammarplast was supplying Starbucks with a substantial number of drip coffee machines.
Under Schultz’s leadership, Starbucks became known for its premium coffee, cozy atmosphere, and experienced, friendly customer service. He later oversaw an IPO and expansion outside North America.