Starbucks Corporation (Nyse: Sbux)

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Starbucks Corporation (Nyse: Sbux)

By | November 2010
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Starbucks Corporation (NYSE: SBUX) is an international coffeehouse that has built one of the world's most powerful and recognizable brands upon high-quality coffee and the unique "Starbucks Experience." [1] Starbucks has sought to capitalize on its growing popularity through expansion; the addition of over 1500 stores in just over a year brought its total store count to over 16,600 in 2008. In fiscal 2008, the company's stores (retailer and licensed) generated US$ 10.4 billion in revenue. [2] Starbucks first revolutionized the coffeehouse industry by marketing expensive, high-quality coffee as well as a "third place" between work and home - a warm, clean, and inviting environment where customers go to escape the chaos of daily life. [3] Not all of the company's strategic decisions have stuck, however - breakfast sandwiches were axed in early 2008 after slow sales made it hard to justify the rising costs of the special items. With the current economic conditions, Starbucks faces significant headwinds. While past concerns over commodities prices, particularly coffee beans and milk, have subsided, a shift in consumer spending triggered by a global economic recession may decrease sales in the coffeehouse market in general, as well as drive consumers to less costly competitors such as McDonald's, which began offering premium coffee in 2006. An additional challenge facing Starbucks may be its own dominance - with a Starbucks on every street corner in some parts of its core U.S. market and an average of 8.5 new locations opened weekly in the country, the company has experienced increasing cannibalization of sales from existing locations. The company seeks to address these issues by cutting costs. It responded closing nearly 800 US stores and 100 abroad in fiscal 2009.

Contributing to Communities: Starbucks firmly believed that when it opened a store, the company added immediate value to that community because the store “becomes an instant gathering spot, a Third...

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