Activities

Starbucks is a wholly-owned subsidiary of Starbucks Corporation of the US, which claims to be the world’s largest retailer and roaster of specialist coffee. It is the market leader in the UK branded coffee shop market.

The group also franchises and licences products such as roasted coffee beans and Frappucinos for sale in supermarkets, and sells coffee beans wholesale to companies such as Eurest (Compass’s staff catering arm) under the “We proudly brew Starbucks” banner.

Timeline

• 1971: US company Starbucks opens its first store in Seattle's Pike Place Market.
• 1980s: Howard Schultz joins the company in 1982 as director of retail operations and marketing. His plan to develop coffee bars along the lines of those found in Milan is backed by the founders in 1983. In 1985, Schultz founds Il Giornale, which offers brewed coffee and espresso beverages made from Starbucks coffee beans, and in 1987 Il Giornale acquires Starbucks and changes its name to Starbucks Corporation.
• 1992: Starbucks floats on the New York stock exchange.
• April 1998:  Starbucks enters the UK market with the £50.8m acquisition of the 65-branch Seattle Coffee Company, which was founded in 1995 by Ally and Scott Svenson and opened its first coffee bar in Covent Garden in 1996.
• 1999: Starbucks strikes up an alliance with Sainsbury’s and, by 2004, has 30 concessions in its supermarkets.
• September 2001: Starbucks buys eight London coffee shops from Madisons Coffee for £1.4m.
• 2002: Starbucks forms a partnership with Borders bookshops and, by early 2005, has 30 concession in its stores.
• November 2002: Starbucks buys 13 coffee bars from Coffee Republic for £2m. 
• January 2004: Starbucks and partner Grupo Vips enter the French market with two coffee bars in Paris.

Operating data

In 2004, Starbucks Corporation reported net earnings in excess of $390m (£207m) on sales 30% ahead at $5.2b (£2.8b). The UK arm was forecast to turn over £220m in 2004.

Starbucks Corporation has more than 9,000 coffee bars in 35 countries in North America, Europe, the Middle East and the Pacific Rim.

Number of UK stores: more than 430

Number of employees worldwide: 74,000
Number of UK employees: about 5,500

Strategy

“Starbucks’ three- to five-year goals are to grow total revenues by approximately 20 per cent per year, achieve comparable store sales growth of three to seven percent with monthly anomalies, and increase earnings per share by approximately 20-25 percent per year. Starbucks’ long-term store target was recently raised from 25,000 to a minimum of 30,000 stores worldwide, with at least 15,000 locations outside the USA”.

Source: Starbucks Corporation annual meeting of shareholders, 9 February, 2005

Key directors

Senior vice-president and president for Europe, the Middle East and Africa: Cliff Burrows
Managing director, UK: Phil Broad

Contact

11 Heathmans Road
London
Greater London
SW6 4TJ

Tel: 020 7878 4900

Website: http://www.starbucks.com

Commentary

Starbucks moved straight into the number two slot in the fledgling UK coffee bar market when it bought the Seattle Coffee Company in 1998. By 2003, it had supplanted Whitbread’s Costa Coffee as the market leader and has retained its supremacy ever since.

According to the annual report into the UK coffee bar scene by Allegra Strategies, Starbucks remains the fastest-growing company in the sector and has increased its share of the market by 4.8% since December 2001.

The group, which is opening an average of 50 new sites a year, accounted for 17.4% of the £1b branded coffee bar market by the close of 2004.
 
The company has plenty of opportunities to expand through existing and new partners, franchising and wholesaling. It entered the French market in early 2004 and plans to move into Ireland in 2005.