Starbucks Helps Us Better Understand ROA and ROIC
What’s interesting about Starbucks is that we can use it to better understand ROA and ROIC
Slightly more than 50% of stores are company owned
- About 36,000 stores
- 18,253 company owned
- 17,458 licensed
- Another 6% of revenue comes from other items
Number of stores worldwide in 2022
- Remainer from other locations
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Revenue breakdown by segment
Starbucks – US – Founded 1971
Cons. Disc. sector, 402,000 employees, US$27bn revenue
Main segments/products/divisions/brands
- Starbucks Coffee beverages
- Frappuccino blended beverages
- Starbucks Reserve Roastery and Reserve stores
Its competitive advantage
Competitive advantage through strong brand loyalty, premium coffee experience, and global expansion.
How it achieved its competitive advantage
Achieved by creating a unique coffeehouse atmosphere, focusing on high-quality beans, providing personalized customer experiences, and building a strong global presence through franchising and company-owned stores.
Howard Schultz (born 1953) Former CEO and chairman of Starbucks
- Joined Starbucks in 1982 and transformed it into a global brand
- Credited with popularizing the concept of the “third place” – a comfortable social gathering spot outside of home and work
- Stepped down as CEO in 2000 but returned in 2008 to guide Starbucks through the global financial crisis, finally stepped down in 2022
- He still owns nearly 2% of the company
The success of the Starbucks app
- 26% of sales from mobile apps alone
- Strong loyalty program
- Earn stars and redeem for free drink
- Added gift card to the app
- Customer convenience
- Order, pay, and skip the line
Aprons colors have meaning
- Green – Classic
- Black – Coffee master
- Pale blue – Happy Hour
- Orange – King’s Day celebration in the Netherlands
A journey from teachers to a global coffee icon
- Original store opened in 1971, Seattle, USA
- Founders: Jerry Baldwin, Gordon Bowker, and Zev Siegl
- Were teachers and a writer who all loved coffee
Quarterly results
- SBUX reported FY3Q23 recurring EPS of US$1.00, which was +24.3% YoY and +25.6% QoQ
- The 9M23 result was 79.5% of our full-year forecast
- About 1% of its sales and 4% of its net income
Valuation
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