Everyone knows about Starbucks coffee. But this article you will find financial data and business analysis.
Starbucks faced competition by specialty coffee shops, restaurants, fast food chains, ready to drink coffee drinks. Company own numerous trademarks in many countries as well as copyrights (packaging, design, training programs). Also increased online competition resulted in reduced foot traffic in some location. In India Starbucks deliver coffee through Zomato service.
All financial data from Annual Report (10-K) and quarterly results. The Company operates in next segments:
- Americas (US, Canada, Latin America). 68% of the revenue.
- China & Asia Pacific. 18% of the revenue.
- Europe, Middle East, Africa. 4% of the revenue.
- Channel development (9% of the revenue), corporate and other (1% of the revenue).
In 2018 established Global Coffee Alliance with Nestle. Also achieved collaboration with PepsiCo, Anheuser-Busch InBev, Tingyi Holding Corp., Arla Foods, etc. Nestle acquired the rights to sell & distribute Starbucks’ packed edible merchandise.
As on 29 September, 2019 Starbucks net revenue is more than $26 billion which is $2 billion higher than 2018 results.
Cost of sales is $8.5 billion, store operation expenses is $10.5 billion. Depression and amortization is $1.3 billion. General and administrative expenses is $1.8 billion. Total operating expenses for year is $22.7 billion. Company’s net profit more than $2 billion. Company’s total assets is $19.3 billion.
Starbucks Corporation’s common stock trades on the NASDAQ under the symbol
“SBUX.” Current price is 83$ per share.
As per Company’s annual report 2018 beverages bring 74% of revenue, food bring 20% of revenue, packaged and single serve coffee & tea brings 2% of revenue, other brings 4% of revenue.
The Starbucks Card reward program increase the frequency of store visit by cardholders. Also mobile app developed to cater towards customers who prefer in-app payment. Every year moderate seasonal demand fluctuation happens (sales in second business quarter lower).
The Company purchase green coffee beans but price is the subject of significant volatility. Company negotiate the commodity price at a premium above the “C” commodity price. Everything depends upon supply (weather condition, crops harvest, natural disasters) and demand (futures markets, competitors, export quotas) at the time of purchase. Company control every step in order to match high coffee standards for blands and single origin coffees.
The Company constantly under the influence of a few major risks. US economy and local economy conditions worldwide influence of customers spending mood. New stores related risks as well as old stores operation. Third party suupplers of ingredients, food, merchandise. Company’s and customers data protection. Software malfunction and cyber attacks. Service level in different stores varies. Local competition may reduce Company’s profitability. Changes in low and exchange rates could bring problems for Company.
Starbucks coffee shops always located in prime locations where rent is high. But prime locations ensure visibility and proper ambience.
For Starbucks United States market extremely important but recently China became significant profit center. For Company China’s market is the fastest growing market and second largest after US. Since two years Starbucks faced additional risks because of trade war & tariffs. Local Chinese coffee shops and a few big coffee chains created stiff competition.
I enjoy Starbucks coffee a few times per week and believe that it’s totally worth of paid price. Starbucks it’s not only and coffee and food, it’s about experience.
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