Business overview: Why Starbucks deserves your attention

Starbucks corporate profile

“Our mission: to inspire and nurture the human spirit—one person, one cup, and one neighborhood at a time.” 

Starbucks (SBUX) began in 1971 as a single coffee shop in Seattle. Today, it’s the world largest coffee retailer, with over 19,000 locations in more than 60 countries (as of FY2013 end). The staff, known as “partners” within the company and “baristas” to the public, sell over 2 billion cups of coffee every year and are at the heart of what Starbucks calls “the Starbucks Experience.” Competitors would have investors believe that Starbucks is selling marginally superior coffee at an unreasonably high price. However, Starbucks might argue this is a narrow-minded view of its business.

It was just coffee—now it’s a way of life

When customers purchase a beverage at Starbucks, they aren’t just buying one of 30 coffee blends. Instead, they’re taking part in an entire process. The beverage is made custom to the buyer’s specifications and comes with the buyer’s name on the side. Customers can peruse a collection of breakfast, lunch, and dinner offerings after receiving a beverage. Afterward, they can sit down and work or listen to music in a quiet, friendly atmosphere. American consumers are notorious for making a ritual out of the first cup of hot coffee in the morning. The staff at Starbucks strives to make itself a part of that ritual—a part of the customer’s life.

Positioning

Starbucks positions itself at the higher-quality end of coffee offerings, alongside Kuerig (a coffee maker brand by Green Mountain Coffee Roasters). This approach contrasts with value-oriented brands, such as Folgers or Dunkin’ Donuts (DNKN), which target the average middle-class American.