For the last 6 years, Starbucks has, on average, opened more than 5 stores PER DAY! 😱
No wonder they are on EVERY street corner!
[THREAD]
No wonder they are on EVERY street corner!
[THREAD]
1/ The company has opened 11,258 stores in the past 6 years.
That's a little less than one-third of McDonald's total restaurant count.
That's a little less than one-third of McDonald's total restaurant count.
2/ The company makes a vast majority of its revenue, 80%, from company-owned stores.
This is a different approach than the franchising approach of McDonald's, where company-owned restaurants made up 45% of sales.
This is a different approach than the franchising approach of McDonald's, where company-owned restaurants made up 45% of sales.
3/ Apparently the reason for this was that Howard Schultz, the founder and long-time CEO, strongly believed in creating an incentivized culture.
4/ In-store, the company makes about 75% of its sales from beverages. Is that about what you were expecting?
5/ Here's a high-level view of the store counts broken out by company-owned vs. licensed.
Notice that the total store count at the end of 2018 was 29,324. In perspective, McDonald's has 38,155 restaurants.
Notice that the total store count at the end of 2018 was 29,324. In perspective, McDonald's has 38,155 restaurants.
6/ Before moving on, we need to understand the difference between franchising and a "licensed" store.
The company licenses its brand in retail centers and acts as a franchisor.
Ever been to a Starbucks inside an airport? Or in a Target?
Those are licensed locations.
The company licenses its brand in retail centers and acts as a franchisor.
Ever been to a Starbucks inside an airport? Or in a Target?
Those are licensed locations.
7/ Now we'll break down the growth in store locations by the three geographies.
We'll start with "Americas" (US, Canada, Brazil)
About 600 new owned stores vs. 1,200 over the past two years. There is a focus on more licenses.
We'll start with "Americas" (US, Canada, Brazil)
About 600 new owned stores vs. 1,200 over the past two years. There is a focus on more licenses.
8/ CAP (China, Asia Pac)
Clear focus on company-owned stores. This is because, in 2018, the company purchased the remaining 50% stake in 1,477 stores in China.
This was the biggest acquisition Starbucks had done at $1.4 billion.
Clear focus on company-owned stores. This is because, in 2018, the company purchased the remaining 50% stake in 1,477 stores in China.
This was the biggest acquisition Starbucks had done at $1.4 billion.
9/ EMEA (Europe, Middle East, Africa)
Europe was the first place where Starbucks allowed franchising. It is now standard practice outside of the Americas segment. You can see the lop-sidedness towards licenses.
Europe was the first place where Starbucks allowed franchising. It is now standard practice outside of the Americas segment. You can see the lop-sidedness towards licenses.
10/ In the Americas, revenue per owned store is about $1.54 million.
You can see, on average, Starbucks gets a 15% cut as a license partner.
You can see, on average, Starbucks gets a 15% cut as a license partner.
11/ We've talked about store count but there are 2 more factors to Starbucks' growth.
- More traffic
- Pricing power
Here you can see the pricing power it has. It is able to raise prices 3-5% annually.
- More traffic
- Pricing power
Here you can see the pricing power it has. It is able to raise prices 3-5% annually.
12/ In summary, the company is shifting to more licenses in mature markets and investing heavily in China through company-owned stores.
It also still has solid pricing power.
Management even returned $9 billion to shareholders last year.
It also still has solid pricing power.
Management even returned $9 billion to shareholders last year.
End/ Fun fact, the name came from Captain Ahab's first mate.
Because of this, the logo is a nautical creature. It looks pretty much like a mermaid.
Because of this, the logo is a nautical creature. It looks pretty much like a mermaid.
