Starbucks

Starbucks Corporation
Type	Public
Traded as	Nasdaq: SBUX S&P 500 component
Industry	Coffeehouse Retail
Founded	31 March 1971, Seattle, Washington
Founder	Jerry Baldwin Zev Siegl Gordon Bowker
Headquarters	Starbucks Center, Seattle, Washington, United States
Key people	Brian Niccol (Chairman and chief executive officer)
Products	Coffee, espresso beverages, tea, food, packaged coffee, merchandise
Employees	Approximately 380,000
Website	starbucks.com

Starbucks Corporation is an American coffeehouse company headquartered in Seattle, Washington. It is the largest such company in the world, operating and licensing more than 40,000 stores in more than 80 countries, and it is among the most recognised consumer brands in existence.

The company was founded on 31 March 1971 by three partners, Jerry Baldwin, Zev Siegl and Gordon Bowker, as a retailer of roasted coffee beans and equipment. It did not sell brewed coffee as its principal business until Howard Schultz, who joined in 1982 and bought the company in 1987, remade it as a chain of cafés on the model of the Italian espresso bar.

Schultz's argument, which he has repeated for forty years, was that Starbucks sells not coffee but a place: a third place between home and work where a person can sit, and that the coffee is the reason to be there rather than the point of being there. The proposition created a category that had not existed in the United States, changed what Americans drink and what they pay for it, and was exported to more than eighty countries.

Starbucks is also the most persistently contested large consumer company in the world. Its labour relations, particularly the unionisation campaign that began in Buffalo in 2021 and has since organised several hundred stores against the company's sustained opposition, its sourcing, its tax arrangements in Europe, its role in gentrification, and its positions on political questions from gun control to the Israeli-Palestinian conflict have each produced boycotts, litigation or legislation.

History

Beans and equipment, 1971 to 1987

Jerry Baldwin, an English teacher, Zev Siegl, a history teacher, and Gordon Bowker, a writer, opened the first Starbucks at 2000 Western Avenue in Seattle on 31 March 1971, moving to 1912 Pike Place in 1976.

They sold roasted whole beans, tea, spices and brewing equipment. They did not sell drinks except as samples. The model was taken directly from Peet's Coffee in Berkeley, founded by Alfred Peet, a Dutch immigrant who had introduced dark-roasted arabica coffee to an American market accustomed to weak robusta blends, and who supplied and taught the Starbucks founders for their first year.

The name came from Moby-Dick. The partners had considered Pequod, after the ship, which Bowker's advertising partner Terry Heckler rejected, and settled on Starbuck, the first mate, partly for the sound and partly because Heckler observed that words beginning with st- are memorable. The siren of the logo was adapted from a sixteenth-century Norse woodcut of a twin-tailed mermaid.

Howard Schultz joined in 1982 as director of retail operations and marketing. Born in Brooklyn and raised in the Canarsie public housing projects, he had been working for Hammarplast, a Swedish housewares company, and had visited Seattle because a small retailer there was buying an unusual number of drip coffee makers.

In 1983 Schultz travelled to Milan for a housewares fair and observed the Italian espresso bar: several per block, each with a barista who knew the customers, serving drinks consumed standing at the counter, functioning as a social institution. He returned convinced that the experience, rather than the beans, was the business.

The founders refused. They were coffee merchants and regarded a café as a distraction from the product. Schultz left in 1985 and opened his own business, Il Giornale, with backing from local investors including Baldwin and Bowker personally.

In 1987 the founders decided to sell Starbucks and concentrate on Peet's, which they had acquired. Schultz raised approximately US$3.8 million, bought the six stores and the roasting plant, merged them with Il Giornale and took the Starbucks name.

Expansion, 1987 to 2000

Schultz's growth was extremely rapid. Starbucks reached Chicago in 1987, Vancouver in 1987, Los Angeles in 1991, and the East Coast in 1993, and listed on Nasdaq on 26 June 1992 at US$17 a share.

The strategy had several distinctive components.

Company-operated stores. Starbucks did not franchise in its core markets, which is the opposite of what McDonald's and every other American chain did. Franchising raises capital and grows faster; company operation preserves control over the experience and over the staff. Schultz's argument was that the product is the experience and that a franchisee optimising for margin would degrade it.

Clustering. The company opened stores close together, deliberately cannibalising its own sales, on the reasoning that density reduces queues, increases visibility and deters competitors from entering. The practice was widely mocked and was commercially effective.

Employee benefits. Starbucks provided health insurance to part-time employees working at least 20 hours a week from 1988, which almost no American retailer did, and stock options under a programme called Bean Stock from 1991. Schultz has attributed this to his father, who worked in low-paid jobs without benefits and was injured without recourse, and it was for many years the company's principal answer to criticism of retail pay.

The vocabulary. Tall, grande and venti, the naming of drinks, and the elaborate customisation created a language that customers had to learn and that both irritated and engaged them.

By 2000 there were more than 3,500 stores and Starbucks had created an American coffee market that had not existed. Per capita consumption of speciality coffee rose substantially, and the price a person would pay for a cup rose by a multiple.

Schultz stepped down as chief executive in 2000, remaining chairman, and was succeeded by Orin Smith and then in 2005 by Jim Donald.

Overexpansion and the return of Schultz, 2000 to 2017

The company opened aggressively through the 2000s, reaching more than 16,000 stores by 2008, and the quality of the experience deteriorated as it did.

Schultz set the problem out himself in a memorandum of February 2007, leaked shortly afterward, titled The Commoditization of the Starbucks Experience. He wrote that automatic espresso machines, adopted for speed and consistency, had removed the theatre of the barista pulling a shot; that flavour-locked packaging had removed the smell of coffee from the stores; that the stores had become sterile and no longer had the soul of the past; and that a series of individually sensible decisions had collectively damaged what the company sold.

The 2008 financial crisis compounded the problem. A five-dollar coffee is discretionary, sales fell, and the shares lost approximately three-quarters of their value.

Schultz returned as chief executive in January 2008. His actions included closing approximately 600 American stores and cancelling several hundred planned openings; closing every American store simultaneously for three hours on 26 February 2008 to retrain baristas, which cost several million dollars in sales and was widely covered; replacing the espresso machines with lower models so customers could see the barista; returning to grinding beans in store; and discontinuing a breakfast sandwich whose cooking smell overwhelmed the coffee.

The recovery was substantial and rapid, and the period is among the more studied turnarounds in retail.

The following decade brought international expansion at scale, particularly in China; the acquisition of Teavana in 2012 for approximately US$620 million, Evolution Fresh, La Boulange and the Italian bakery Princi; the development of the Reserve Roastery format, very large stores in Seattle, Shanghai, Milan, New York, Tokyo and Chicago intended as brand statements; and the mobile application and rewards programme, which became among the most successful in retail.

Schultz stepped down as chief executive again in April 2017, succeeded by Kevin Johnson, formerly of Microsoft and Juniper Networks.

Unionisation and instability, 2018 to 2024

On 12 April 2018 two Black men, Rashon Nelson and Donte Robinson, were arrested at a Philadelphia store after the manager called the police because they had not ordered while waiting for a business meeting. The video circulated widely. Starbucks closed approximately 8,000 American stores on 29 May 2018 for racial bias training, reaching about 175,000 employees, and adopted an open-door policy allowing anyone to use the stores and the lavatories without purchasing.

The pandemic closed stores, moved the business toward drive-through and mobile ordering, and changed the pattern of work in the stores substantially, with a very large proportion of orders arriving through the application and requiring baristas to produce complex drinks continuously rather than to serve a queue.

The unionisation campaign began at a store in Buffalo, New York, which voted to join Workers United on 9 December 2021, the first company-operated American Starbucks to do so. The campaign spread rapidly, with several hundred stores voting to unionise over the following three years.

Starbucks opposed it comprehensively. The National Labor Relations Board issued a very large number of complaints, and administrative law judges found repeated violations including the dismissal of organisers, the closure of stores that had organised, the withholding of benefits from unionised stores and surveillance. The company disputed the findings, appealed, and in 2024 challenged the constitutionality of the board itself, litigation running in parallel with similar challenges by SpaceX and Amazon. The Supreme Court decided Starbucks Corp. v. McKinney in June 2024, raising the standard courts must apply before granting the board injunctions reinstating dismissed workers, a decision favourable to employers generally.

Schultz returned as interim chief executive for a third time in April 2022, during the height of the campaign, and was replaced in March 2023 by Laxman Narasimhan, formerly of Reckitt and PepsiCo.

Sales deteriorated from 2023. American same-store sales fell as customers objected to prices, to waiting times caused by mobile ordering and to the store experience; Chinese sales fell sharply under competition from Luckin Coffee and others; and boycotts arising from the Israeli-Palestinian conflict, which followed a lawsuit Starbucks brought against its own union over a social media post and which rested on a widespread and incorrect belief that the company funds Israel, affected several markets.

Narasimhan was removed on 13 August 2024 after seventeen months, and Brian Niccol, who had turned around Chipotle since 2018, was appointed with a compensation package and an arrangement permitting him to work partly from California that both attracted comment.

Back to Starbucks, 2024 to 2026

Niccol's programme, announced as Back to Starbucks, addressed the experience rather than the menu.

Its elements have included reducing the menu substantially; restoring ceramic mugs and condiment bars for customers sitting in; writing names on cups by hand; reintroducing seating that had been removed; committing to a four-minute service standard; reducing discounting and promotional complexity; and reversing the open-door policy in January 2025 so that lavatories and seating are for paying customers, a decision that reversed the 2018 response to Philadelphia and that homelessness organisations criticised.

Approximately 1,100 corporate positions were cut in February 2025 and further reductions followed, and the company closed several hundred underperforming stores.

In January 2026 Starbucks announced a joint venture with Boyu Capital to operate its Chinese business, its second largest market, selling a controlling interest while retaining a substantial minority and the brand and licensing income. The structure follows what McDonald's and Yum! Brands did in China earlier and reflects a judgement that a local partner can compete better against Luckin than a foreign-operated business can.

In March 2026 the company announced a regional corporate hub in Nashville, Tennessee, with an investment of approximately US$100 million.

Anand Varadarajan, from Amazon, was announced as chief technology officer on 19 December 2025, effective 19 January 2026.

Business model

Store formats and economics

Starbucks operates approximately 40,000 stores, roughly half company-operated and half licensed.

Company-operated stores are in the United States, China until the Boyu transaction, Canada, the United Kingdom, Japan and a small number of other markets. The company holds the lease, employs the staff and takes the revenue.

Licensed stores are operated by partners inside airports, supermarkets, universities, hospitals and service stations, and by master licensees in many countries. Starbucks supplies the coffee and the brand and takes a royalty, which requires no capital and produces a much smaller absolute contribution.

Drive-through has become the dominant format in the United States, accounting for a very large share of new openings and of transactions, and the pandemic accelerated a shift that was already under way. A drive-through store is cheaper to build, serves more customers per square foot and has almost nothing to do with the third place proposition on which the company was built, which is the central tension in its current strategy.

Reserve Roasteries in Seattle, Shanghai, Milan, New York, Tokyo and Chicago are very large stores combining roasting, several bars, food and merchandise. They are brand exercises rather than a scalable format, and the Shanghai Roastery is among the highest-grossing coffee locations in the world.

The unit economics of a typical American store involve revenue of roughly US$1.5 million to US$2 million a year, with cost of sales around 30 per cent, labour around 30 per cent, occupancy around 10 per cent, and a store-level margin in the twenties before corporate costs.

Rewards and digital

Starbucks Rewards is among the most successful retail loyalty programmes ever operated, with more than 30 million active American members.

Its distinguishing feature is that customers load money onto the application in advance. The balances held on Starbucks cards and in the application have at times exceeded US$1.5 billion, which is an interest-free loan from customers, and the proportion never redeemed, called breakage, is recognised as revenue. Commentators have observed that Starbucks holds more customer deposits than many small banks and is not regulated as one.

Mobile order and pay, introduced in 2015, now accounts for approximately a third of American transactions. It improved throughput and produced the operational problem that has dominated recent years: a store receives a continuous stream of complex customised orders with no queue to pace them, which overwhelms baristas, lengthens waits and removes the interaction the brand is built on. The unionisation campaign's grievances refer to it repeatedly, and Niccol's operational changes are directed at it.

Supply

Starbucks buys approximately 3 per cent of the world's coffee, principally washed arabica from Latin America, and roasts it at plants in Kent and Sandy Run in the United States, Amsterdam, Shanghai and elsewhere.

C.A.F.E. Practices, developed with Conservation International from 2004, is the company's sourcing standard, covering quality, economic transparency, social conditions and environmental practice, verified by third-party inspectors. Starbucks reports that the great majority of its coffee is sourced under it.

The standard has been criticised as weaker than Fairtrade certification, as verified by inspectors the company pays, and as unable to detect abuses in the seasonal labour that harvesting requires. Investigations, including a 2023 report on Brazilian farms and repeated findings concerning child labour on certified farms in several countries, have identified conditions the scheme did not catch. Starbucks suspends farms when abuses are found and campaigners argue that suspension after the fact is not prevention.

The company operates farmer support centres in Costa Rica, Rwanda, Tanzania, Colombia, China and elsewhere, providing agronomy advice and rust-resistant seedlings free, and has a US$50 million Global Farmer Fund providing finance.

Coffee prices reached record levels in 2024 and 2025 following drought in Brazil and Vietnam, which has pressed margins across the industry.

Products

The menu is substantially larger than that of an Italian espresso bar and the difference is the business.

Espresso beverages including the latte, cappuccino, americano, flat white and macchiato form the base, with syrups, milk alternatives, and modifications that produce an extremely large number of possible combinations.

Frappuccino, acquired with The Coffee Connection in 1994 and developed into a line, is a blended iced drink and has been among the company's most profitable products and the one furthest from coffee as the founders understood it.

Cold brew, iced shaken espresso and the broader cold platform now account for the large majority of American sales, a change over roughly fifteen years that has altered the company's operations substantially, since cold drinks require different equipment, more ice, more cups and more labour per drink.

Refreshers, Teavana teas, Baya canned energy drinks introduced in January 2022 using caffeine from coffee fruit, and Iced Energy introduced in June 2024 extend the range beyond coffee.

Food comprises pastries, sandwiches, protein boxes and the Princi bakery items, and has grown to roughly a fifth of American sales.

Packaged coffee is sold through supermarkets under an arrangement with Nestlé, which acquired the perpetual rights to market Starbucks packaged and foodservice products worldwide in 2018 for US$7.15 billion. The transaction removed a business Starbucks had built and replaced it with a royalty stream requiring no capital, and is generally regarded as having been well judged by both parties.

Pumpkin Spice Latte, introduced in 2003, is the most commercially significant seasonal product in the industry and its annual return has become a cultural marker.

International operations

Starbucks operates in more than 80 countries and its experience has varied enormously.

China is the second largest market and was, until recently, the principal growth story. Starbucks opened in Beijing in 1999, built a company-operated business of more than 7,000 stores, and created a café culture in a tea-drinking country by selling the store rather than the coffee: Chinese Starbucks are larger, are used for meetings and for study, and the average visit is far longer than in the United States.

The position deteriorated from 2022. Luckin Coffee, which had collapsed in 2020 after an accounting fraud and was rebuilt, expanded to more than 20,000 stores, principally small pickup locations, at prices roughly half Starbucks's, and overtook it in both stores and revenue. Cotti Coffee and others followed. Starbucks's same-store sales fell substantially, and the January 2026 joint venture with Boyu Capital, under which the private equity firm takes a controlling interest in the Chinese retail business while Starbucks retains a minority and the licensing income, is the response.

Japan was the first market outside North America, entered in 1996 through a joint venture with Sazaby League, taken to full ownership in 2014. It has been consistently successful and Japanese Starbucks is regarded domestically as a premium brand.

Italy was entered only in September 2018, with a Reserve Roastery in Milan, 35 years after Schultz's visit. The delay was deliberate: he has said he was unwilling to enter the country whose coffee culture had inspired the company until he could do so convincingly. Reception has been mixed and the number of stores remains small.

The United Kingdom was entered in 1998 through the acquisition of the Seattle Coffee Company, and is the largest European market by stores. It has been unprofitable for long periods and was the subject of the 2012 tax controversy described below.

India operates as Tata Starbucks, a joint venture with Tata Consumer Products established in 2012, which has grown steadily and which uses Indian-grown and roasted coffee.

Korea, Taiwan, Thailand, Indonesia, Vietnam, entered in Ho Chi Minh City on 1 February 2013 and passing 150 stores by January 2026, the Philippines and Malaysia constitute a large Asian footprint operated variously directly and through licensees.

The Middle East operates through the Alshaya Group as master licensee across Kuwait, Saudi Arabia, the United Arab Emirates, Egypt and elsewhere. Alshaya reduced its workforce substantially in 2024 after boycotts related to the Gaza conflict cut sales across the region.

Latin America includes long-established operations in Mexico, Brazil, Chile and Argentina, and entries into Ecuador in August 2024 and Honduras later that year.

Australia is the company's clearest failure. Starbucks entered in 2000, opened approximately 85 stores, and closed roughly two-thirds of them in 2008 after losses of approximately A$143 million. The Australian coffee market was already served by a very large number of independent cafés with a culture derived from post-war Italian and Greek immigration and with a standard of espresso preparation higher than Starbucks offered, and the proposition that Starbucks would teach Australians about coffee was not persuasive. The remaining stores were sold to the Withers Group in 2014 and the business has grown slowly since, to around 59 stores as of November 2022, concentrated in tourist areas.

Russia was exited in 2022 following the invasion of Ukraine, with the stores sold to a local buyer and rebranded Stars Coffee.

Israel was exited in 2003 after six unprofitable stores, a fact of some importance given the later boycotts.

Labour

The historical position

Starbucks positioned itself for three decades as an unusually good employer by the standards of American retail. Health insurance for part-time employees from 1988, stock options from 1991, tuition assistance through the Arizona State University online programme from 2014, and the use of the word partner rather than employee were the elements.

The argument Schultz made was that the company's product is delivered by the person behind the counter, that turnover destroys the experience, and that benefits are therefore an investment rather than a cost. It was substantially true and was also, explicitly, a reason employees would not need a union.

The campaign

The Buffalo vote in December 2021 began a campaign that has organised several hundred stores through Workers United, an affiliate of the Service Employees International Union.

The grievances were specific and operational: understaffing relative to the volume of mobile orders; unpredictable scheduling; the physical demands of producing complex cold drinks continuously; pay that had fallen behind other service employers in a tight labour market; and safety concerns.

Starbucks's response involved every instrument available to an American employer. Managers were deployed to stores holding votes; Schultz personally addressed employees; benefits and pay increases were announced for non-unionised stores and withheld from unionised ones, which the National Labor Relations Board found unlawful; organisers were dismissed, with judges ordering reinstatements; and stores that organised were closed, which the company attributed to safety and performance.

The board issued complaints covering a very large number of alleged violations and administrative judges found against the company repeatedly. Starbucks appealed and in 2024 challenged the board's constitutional structure, arguing that the protections against removal of its members and administrative judges are unconstitutional, a position several other large employers adopted simultaneously and which has the practical effect of suspending proceedings.

The Supreme Court's decision in Starbucks Corp. v. McKinney in June 2024 required courts to apply the traditional four-factor test before granting the board preliminary injunctions, which makes reinstatement of dismissed organisers slower and harder and which applies to every employer.

Negotiations toward a framework agreement began in 2024 with joint statements from both sides, progressed for a period, and had not produced a contract for any store by 2026. A strike beginning in late 2025 extended across a number of stores.

The campaign is the most significant private-sector unionisation effort in the United States in decades and its outcome is unresolved. Several hundred stores of approximately 10,000 company-operated American locations have organised, which is both a substantial achievement against determined opposition and a small proportion.

Controversies

Tax

In October 2012 a Reuters investigation found that Starbucks had paid approximately £8.6 million in British corporation tax over fourteen years on sales of approximately £3 billion, and had reported losses in most of those years while telling investors that the British business was profitable.

The mechanisms were lawful and conventional: a royalty paid to a Dutch entity for the use of intellectual property; coffee bought through a Swiss trading company at a margin; and intercompany loans generating deductible interest. The effect was to move profit out of the United Kingdom.

The disclosure produced parliamentary hearings, in which the Public Accounts Committee questioned executives, protests organised by UK Uncut, and a boycott. Starbucks responded by volunteering to pay £20 million over two years regardless of its taxable profit, an arrangement without legal basis and which the committee's chair described as showing that tax had become a matter of public relations.

The European Commission subsequently found in 2015 that a Dutch tax ruling constituted unlawful state aid and ordered recovery of approximately €30 million, a decision annulled by the General Court in 2019.

The episode was among the principal catalysts of the OECD's base erosion and profit shifting programme and of the subsequent global minimum tax agreement.

Philadelphia and the open-door policy

The arrests in April 2018 and the closure of 8,000 stores for training are described above. The open-door policy adopted in response, allowing anyone to use the stores and lavatories, was reversed in January 2025 under Niccol.

The reversal was defended on the ground that the policy had made stores uncomfortable for customers and unsafe for staff, and criticised on the ground that Starbucks had for seven years functioned as one of the few accessible public lavatories in American cities and had now withdrawn that, transferring the problem to municipalities that have not solved it.

Boycotts and political positions

Starbucks has taken public positions more often than most consumer companies and has been boycotted from several directions.

Race Together in 2015 invited baristas to write the phrase on cups and discuss race with customers. It was withdrawn within a week after widespread ridicule and objection from employees who had not asked to conduct those conversations, and it is a standard example of corporate social initiative misjudged.

Guns. Schultz asked customers in 2013 not to bring firearms into stores, stopping short of a prohibition, which produced objection from both gun rights and gun control organisations.

Refugees. Schultz announced in January 2017, following the first Trump administration's travel restrictions, that Starbucks would hire 10,000 refugees worldwide, which produced a substantial boycott campaign in the United States.

Israel and Palestine. Starbucks has no operations in Israel, having withdrawn in 2003, and does not fund the Israeli government. A widespread belief to the contrary, circulating for two decades and amplified after October 2023, produced boycotts across the Middle East, Malaysia, Indonesia and elsewhere with substantial commercial effect, including very large reductions at the Alshaya licensee. The proximate trigger was a lawsuit Starbucks brought against Workers United over a social media post expressing solidarity with Palestinians, which the company said misused its trademark and which was widely read as a political position.

Christmas cups. A 2015 plain red cup design produced a campaign alleging hostility to Christmas, an episode that is principally notable as an illustration of how little is required.

Health and environment

Sugar. A very large proportion of Starbucks's beverages contain quantities of sugar comparable to or exceeding soft drinks, and public health organisations including Action on Sugar have repeatedly identified the most extreme examples. The company has reduced sugar in some products and has introduced smaller sizes.

Cups. Starbucks uses several billion single-use cups a year. The paper cup is lined with polyethylene, which makes it difficult to recycle in most facilities. The company has pursued a recyclable and compostable cup for more than a decade through the NextGen Consortium, has trialled reusable cup schemes with deposits in several markets, offers a discount for a personal cup, and introduced a lighter cup design in 2024. Environmental organisations have noted that a discount adopted by a small percentage of customers does not address several billion cups.

Water. The Ethos Water brand, acquired in 2005, donates a small amount per bottle to water projects. A 2008 report that Starbucks left taps running continuously in its stores for hygiene reasons, using very large quantities of water, produced criticism and a change in practice.

Emissions. Starbucks has committed to halving emissions, water use and waste by 2030. Dairy is the largest single component of its footprint, which is why the company has promoted plant-based milks and, in several markets, removed the surcharge for them.

Other

Store closures in unionised locations, in Seattle and elsewhere in 2022, were attributed by the company to safety and by the union to retaliation, and the board found against the company in several instances.

Gentrification. The arrival of a Starbucks is used in urban economics as an indicator of gentrification, and research has found correlation between openings and subsequent house price increases. The company's role is as a signal rather than a cause, which has not prevented it being treated as a target.

Competition. Starbucks has been accused of opening deliberately near independent cafés to drive them out, a practice documented in the 1990s and reduced since, and its clustering strategy had that effect whether or not it was the intention.

Regional operations in detail

Japan

Starbucks entered Japan in August 1996 with a store at Ginza, through a joint venture with the Sazaby League, taking full ownership in 2014 for approximately US$914 million.

The entry was the company's first outside North America and was regarded as risky: Japan had an established café culture, the kissaten, with its own conventions, and a strong domestic chain in Doutor. Starbucks succeeded by being positioned as a premium Western brand, by offering a non-smoking environment at a time when Japanese cafés generally permitted smoking, and by appealing particularly to women, for whom the kissaten had not been a comfortable setting.

Japan is now among the company's most successful markets, with more than 1,900 stores, exceptional local product development including the sakura seasonal range, and several stores of architectural note, including the Kyoto Ninenzaka store in a traditional wooden townhouse with tatami seating and the Dazaifu store designed by Kengo Kuma from interlocking wooden battens.

Korea

Starbucks Korea, operated as a joint venture with Shinsegae and taken to majority local ownership in 2021, is among the company's largest markets by store density, with Seoul containing more Starbucks per square kilometre than almost any city.

Korean consumption patterns differ substantially: stores are used for extended study and work to a degree exceeding even China, the cafés are larger, and the market is intensely competitive with domestic chains including Ediya, Mega Coffee and A Twosome Place competing on price.

United Kingdom

Entered in 1998 through the acquisition of the Seattle Coffee Company's 56 stores, the British business has approximately 1,000 locations, roughly two-thirds of them franchised, and has been unprofitable for long periods.

The reasons include high rents, a market already served by Costa, which is larger, and by Caffè Nero and a very large number of independents, and the reputational damage of the 2012 tax controversy, from which the British business's sales took years to recover.

Canada

Entered at Vancouver in 1987, the first market outside the United States, and now with more than 1,400 stores, competing principally with Tim Hortons, which holds a position in Canadian life that Starbucks does not approach.

France, Germany and continental Europe

France was entered in 2004 and has grown slowly, with the café already central to national life and with domestic resistance. Germany was entered in 2002 and the company sold its German stores to a licensee, AmRest, in 2016 after persistent losses. Switzerland, Austria, Spain, Portugal, the Netherlands, the Nordic countries and Central Europe are served variously directly and through licensees.

The general European pattern is that Starbucks performs best where the existing café culture is weakest and worst where it is strongest, which is the inverse of what the company's founding inspiration would suggest.

Brazil and Latin America

Brazil is the largest coffee-producing country in the world and has been a difficult market, with the business sold to a licensee in 2022 after that operator entered judicial recovery, subsequently passing to SouthRock and then being restructured. Mexico, operated by Alsea, is the largest Latin American market by stores. Chile, Argentina, Colombia, Peru, Costa Rica, Panama, Ecuador from August 2024 and Honduras from late 2024 complete the region.

Middle East and North Africa

The Alshaya Group of Kuwait has been the master licensee since 1999 and operates across Kuwait, Saudi Arabia, the United Arab Emirates, Qatar, Bahrain, Oman, Jordan, Lebanon, Egypt, Morocco and Turkey.

The boycotts following October 2023 reduced sales across the region very substantially, and Alshaya reduced its Middle Eastern Starbucks workforce by approximately 2,000 people in early 2024. The boycotts rested on a belief that Starbucks funds Israel, which is not correct, and the company's public statements to that effect had limited effect.

Africa

South Africa was entered in 2016 through Taste Holdings and subsequently passed to a new licensee. Egypt and Morocco operate through Alshaya. The continent otherwise has very few stores, which is notable given that Starbucks buys substantial quantities of East African coffee.

Store numbers and growth

Starbucks's store count has grown as follows, approximately: 6 in 1987, 84 in 1990, 425 in 1994, 1,015 in 1996, 2,498 in 1999, 5,886 in 2002, 10,241 in 2005, 16,680 in 2008, 17,003 in 2011, 21,366 in 2014, 27,339 in 2017, 31,256 in 2019, 33,833 in 2021, 38,038 in 2023, and more than 40,000 since.

The 2008 to 2011 plateau reflects the closures under Schultz. The growth since 2015 has been driven overwhelmingly by China, until 2023, and by American drive-through and licensed formats.

The company set a target of 55,000 stores by 2030 under Narasimhan, which Niccol has not repeated and which the closures of underperforming locations and the Chinese restructuring make unlikely.

Notes on the brand

The siren is drawn from a fifteenth or sixteenth-century woodcut of a twin-tailed melusine, chosen by the founders because a mermaid suited a Seattle coffee company drawing on maritime trade and because she was, as Terry Heckler put it, as seductive as the coffee.

The original 1971 mark was brown and showed the figure fully, with a visible navel and an unambiguous bare chest. The 1987 redesign, following the Il Giornale merger, made her green, cropped the image and covered her with her hair. The 1992 version zoomed in further. The 2011 version removed the surrounding ring and the words entirely, leaving the figure alone in green.

The colour green was taken from Il Giornale.

The cup sizes are short at 8 ounces, which is not displayed on menus but is available; tall at 12; grande at 16; venti at 20 hot and 24 cold; and trenta at 31 ounces for cold drinks only, introduced in 2011.

The company's employees are called partners, a term adopted with the Bean Stock programme in 1991 on the reasoning that stock ownership made them partners in fact. The term is used consistently in internal and external communication and has been a point of friction during the labour dispute, with organisers noting that the word describes a relationship the company's conduct does not reflect.

The third place

The idea on which Starbucks was built came from sociology rather than from business.

Ray Oldenburg's The Great Good Place (1989) argued that a healthy society requires three kinds of setting: the home, the workplace, and a third place, neutral ground where people gather without obligation, where status is levelled, where conversation is the main activity and where regulars set the tone. His examples were the English pub, the French café, the German beer garden and the American tavern before it declined, and his argument was that suburban American development had eliminated them.

Schultz adopted the term explicitly and it became the company's organising concept. The design decisions followed from it: comfortable chairs rather than fixed seating, permission to remain without buying again, music at a volume permitting conversation, lighting that is not fluorescent, and staff who learn names.

The proposition worked and it was never quite what Oldenburg described. A third place in his sense is not owned by a company, does not require a purchase and does not have a corporate design manual, and several urban sociologists have argued that a commercial simulation of a third place is a different thing that may displace the real ones.

The more immediate difficulty is that the economics have moved against it. A customer occupying a chair for two hours with one purchase produces less revenue per square foot than a drive-through serving a car every thirty seconds. The company's growth since 2015 has come overwhelmingly from formats that have no third place at all, and the removal of seating during and after the pandemic, the reversal of the open-door policy in January 2025 and the dominance of mobile ordering have each moved further from it.

Niccol's Back to Starbucks programme is an explicit attempt to restore it, through seating, ceramic mugs, condiment bars and handwritten names, and it is being attempted in a business where approximately three-quarters of American transactions no longer involve a customer sitting down.

Competition in detail

China

The Chinese contest is the most consequential the company has faced and it was lost quickly.

Starbucks entered in 1999 and spent twenty years establishing a premium café culture in a tea-drinking country. Its stores were large, were used for meetings and study, and a latte cost roughly the price of a meal.

Luckin Coffee was founded in 2017 with a different model: small stores for collection rather than seating, ordering only through an application, heavy discounting funded by investment, and rapid expansion. It listed in the United States in 2019, was exposed in 2020 as having fabricated a very large proportion of its reported sales, was delisted, paid a US$180 million penalty and was expected to fail.

It did not. Under new management it expanded to more than 20,000 stores, reached profitability, and overtook Starbucks in Chinese revenue and store count. Its price is approximately half, its product is competent rather than excellent, and its convenience is greater for a customer who wants coffee rather than a place to sit.

Cotti Coffee, founded by Luckin's ousted management, expanded at comparable speed, and a very large number of smaller chains and independents followed.

Starbucks's response was slow. It continued to open large stores, maintained premium pricing, and lost same-store sales for consecutive quarters. The January 2026 joint venture with Boyu Capital, under which the private equity firm takes control of the retail business while Starbucks retains a minority and licensing income, follows the pattern established by McDonald's with CITIC and Carlyle in 2017 and by Yum! Brands with its Yum China separation, and reflects a judgement that a locally controlled operator can move faster and price more aggressively than a foreign-operated subsidiary answering to Seattle.

United States

The American competitive picture is different. Starbucks's share of the coffee shop market is very large and its principal competitors address different occasions.

Dunkin' sells a cheaper, faster and less elaborate product to a customer who wants caffeine on the way to work, is franchised, and is strongest in the Northeast.

McDonald's through McCafé competes on price and on drive-through, and improved its coffee substantially from the mid-2000s in direct response.

Dutch Bros, a drive-through chain from Oregon, has expanded rapidly on a model of speed, sweet drinks and unusually energetic service, and is the fastest-growing American competitor.

Scooter's, Black Rock, 7 Brew and regional drive-through chains occupy the same segment.

Independent speciality cafés compete at the top on quality and on single-origin coffee, and their proprietors are frequently critical of Starbucks while acknowledging that it created the customer.

Convenience stores, principally Wawa, Sheetz and Casey's, sell very large quantities of coffee cheaply and have improved quality substantially.

Home preparation competes for the occasion, and the growth of espresso machines, pod systems and home cold brew has taken some visits permanently.

Governance and shareholders

Starbucks has a conventional single-class share structure and no controlling shareholder, with the index managers Vanguard, BlackRock and State Street the largest holders.

The board has included figures from technology, consumer goods and finance, and Howard Schultz returned to it and left it several times, finally resigning as chairman emeritus and from the board in 2023, though he has continued to comment publicly on the company's direction, including criticism of aspects of the turnaround.

Shareholder resolutions have been filed on labour rights, including one in 2024 supported by a majority requesting an independent assessment of the company's adherence to its stated commitment to freedom of association, which the board opposed and which passed, and on climate and packaging.

Executive compensation has been a persistent subject of dissent, particularly Niccol's package and the remote working arrangement.

The company has been the subject of activist interest, with Elliott Management taking a position in 2024 before Niccol's appointment and Starboard Value subsequently, both pressing for operational improvement rather than for structural change.

Environment in detail

Cups. Starbucks uses several billion single-use cups annually. The hot cup is paperboard lined with polyethylene, which makes it recyclable only in facilities that can separate the layers, and most cannot. The cold cup is polypropylene or polyethylene terephthalate.

The company has worked on the problem for two decades. It offered a discount for personal cups from 1985. It convened the NextGen Consortium with McDonald's and others to develop a recyclable and compostable cup, awarding grants and testing designs. It introduced a lighter cold cup in 2024 using approximately 20 per cent less plastic. It has trialled reusable cup schemes with deposits in Seattle, Napa, London, Tokyo and Singapore, and a borrow-a-cup programme in Korea. From 2025 personal cups have been accepted for mobile and drive-through orders in the United States, which removes the principal obstacle to their use.

The adoption rate for personal cups remains in the low single digits of transactions, which is the fact that determines the outcome regardless of the programmes.

Water and dairy. Dairy is the largest component of the company's emissions footprint, which is why plant-based milks have been promoted and why the surcharge for them was removed in several markets from 2024. Water use in stores was reduced after the 2008 dipper well controversy, in which taps ran continuously for utensil rinsing.

Stores. Starbucks has built to LEED standards since 2005 and reports on energy and renewable electricity procurement.

Targets. The company has committed to halving carbon emissions, water withdrawal and waste sent to landfill by 2030 against a 2019 baseline, and reports annually. Independent assessment has found the commitments credible in design and the progress slower than the trajectory requires, which is the general finding across the sector.

Starbucks in language and culture

The company's cultural footprint is unusually large and several specific phenomena are documented.

The vocabulary of tall, grande and venti, and the ordering formula in which size precedes milk precedes syrups precedes the drink, is learned behaviour that customers perform, and the performance is part of the experience for some and an irritation for others. Venti means twenty in Italian, for the ounces; trenta means thirty.

The name on the cup, introduced to manage multiple orders, has produced a very large body of humour about misspellings, some of which the company has been accused of committing deliberately for the resulting social media coverage, a claim it denies.

The Starbucks index, published by The Economist as a variant of the Big Mac index, compares the price of a tall latte across countries as a measure of purchasing power parity.

Gentrification. Economists at Harvard and elsewhere have found correlations between Starbucks openings and subsequent house price appreciation, and the company's site selection, which uses the same demographic data that predicts gentrification, makes it an indicator rather than a cause.

In fiction the company appears constantly, generally as shorthand for a particular urban professional life, and Fight Club, Austin Powers, The Simpsons and 30 Rock each use its ubiquity as a joke.

The siren has been redrawn four times, in 1971, 1987, 1992 and 2011, becoming progressively less detailed and less anatomically explicit, and in 2011 the wordmark was removed entirely, which very few brands can do.

Coffee

Sourcing and roasting

Starbucks buys only arabica, which is more expensive and more flavourful than the robusta used in most commodity coffee, and principally washed arabica, processed by removing the fruit before drying, which produces a cleaner and more acidic cup than the natural process.

Its principal origins are Latin America, with Colombia, Guatemala, Costa Rica and Brazil the largest, together with East Africa, particularly Ethiopia, Kenya and Rwanda, and Asia-Pacific, principally Indonesia and increasingly China's Yunnan province, where the company has invested in cultivation.

The house roast has always been dark. This was Alfred Peet's influence and it was a deliberate choice: dark roasting produces consistency, because it reduces the differences between lots, and it produces a robust flavour that survives milk, sugar and ice, which is what the great majority of the company's drinks contain. It also removes much of the origin character that speciality roasters prize, which is the basis of the standard criticism of Starbucks coffee among enthusiasts and of the nickname Charbucks, the last of which produced a long trademark dispute with a Massachusetts roaster that Starbucks eventually lost.

Blonde Roast, introduced in 2012, addressed this by offering a lighter roast, and Starbucks Reserve offers small-lot single-origin coffees at premium prices in selected stores and the Roasteries.

Roasting is conducted at company plants including Kent and Auburn in Washington, York in Pennsylvania, Minden in Nevada, Augusta in Georgia, Sandy Run in South Carolina, Amsterdam and Shanghai, using computer-controlled drum roasters and a quality process involving very large numbers of cupping sessions daily.

C.A.F.E. Practices and farmer support

Coffee and Farmer Equity Practices, developed with Conservation International and introduced in 2004, is a verification programme rather than a certification, in that Starbucks sets the standards and pays inspectors rather than a third-party body owning the scheme.

It assesses quality, economic transparency, meaning that the farm must document what it paid workers and what it received, social responsibility, covering wages, conditions, housing and child labour, and environmental leadership, covering water, soil, shade and chemical use. Farms are scored and higher scores earn preference and premium prices.

Starbucks reports that a very high proportion of its coffee is sourced under the scheme and that it has invested more than US$100 million in farmer support, including the farmer support centres, the Global Farmer Fund providing loans, and the free distribution of coffee rust-resistant seedlings during the epidemic that affected Central America from 2012.

The criticisms are consistent. The scheme is weaker than Fairtrade on price floors, since it does not guarantee a minimum. It relies on inspections that farms can prepare for. It covers permanent employees better than the seasonal pickers who do the harvesting and who are the most vulnerable. And investigations, including reporting on Brazilian farms in 2023 and findings concerning child labour in Guatemala broadcast in 2020, have repeatedly identified conditions the verification did not catch.

Starbucks's response has been to suspend the farms concerned and to strengthen the scheme, and its defenders point out that the company buys from very large numbers of farms and that no verification system detects everything. Its critics reply that a scheme the company designs and pays for cannot be relied on as an assurance.

Prices and the farmers

The economics of coffee are such that the grower receives a small fraction of the retail price. A cup of coffee sold for several dollars contains coffee worth a few cents at the farm gate, and the remainder is roasting, distribution, labour, rent and margin.

This is not a conspiracy, it is the structure of a business in which the raw material is a small part of the cost of a prepared drink, and it is the same for tea, for chocolate and for beer. It nonetheless means that the price a farmer receives is determined by the commodity market and by the differentials paid for quality, not by what the retailer charges.

Starbucks pays above the commodity price for its quality grades, a premium it reports and which is not independently verified, and the coffee price spike of 2024 and 2025 following droughts in Brazil and Vietnam improved farmer returns substantially while pressing the company's margins.

Store design

Starbucks employs a very large internal design organisation and its stores are not standardised in the way a fast food restaurant's are.

The company operates regional design studios, in Seattle, New York, Amsterdam, Shanghai, Tokyo and elsewhere, and its policy since the early 2010s has been that stores should reflect their location, using local materials, local artists and, in some cases, existing buildings.

The result includes stores in a former bank vault, in a converted house in Amsterdam's bank vault, in a Kyoto machiya with tatami seating, in a Shanghai heritage building, in shipping containers in Washington State, and in a Seoul store with no cash registers.

The Reserve Roasteries in Seattle, opened 2014, Shanghai 2017, Milan and New York 2018, Tokyo 2019 and Chicago 2019 are very large, between 15,000 and 35,000 square feet, and combine visible roasting, several bars, cocktails, bakery and merchandise. The Shanghai and Chicago Roasteries are among the highest-grossing coffee locations in the world and their commercial purpose is brand rather than volume.

The third place design language, comfortable chairs, non-fluorescent lighting, music, and permission to remain for hours, was the founding concept and has been progressively reduced. Seating was removed during the pandemic and in response to loitering concerns; drive-through and mobile pickup stores have little or none; and the reintroduction of seating and ceramic mugs under Niccol is an attempt to restore it.

Music was a deliberate element. Starbucks compiled and sold albums from 1995, acquired the Hear Music label in 1999, released albums including Ray Charles's Genius Loves Company, which won eight Grammy awards in 2005, and operated a record label until the business was closed in 2008.

Technology

Starbucks has been an unusually early and effective adopter of retail technology.

Mobile payment launched in 2011 and for several years Starbucks processed more mobile payments in the United States than Apple Pay, Google Pay and Samsung Pay combined, because the stored-value card model gave customers a reason to use it that general payment systems lacked.

Mobile order and pay launched in 2015 and now accounts for approximately a third of American transactions, and its operational consequences are described above.

Deep Brew is the company's machine learning platform, applied to inventory forecasting, labour scheduling, equipment maintenance prediction and personalised offers in the application. The personalisation is among the more sophisticated in retail: offers are generated individually rather than selected from a small number of campaigns.

Store systems. Starbucks has invested in connected equipment, with espresso machines and brewers reporting condition and usage, and in the Siren System, a redesigned equipment set intended to reduce the steps required to make a drink, particularly cold drinks, which was rolled out from 2023 and is central to the four-minute service objective.

Blockchain traceability, developed with Microsoft from 2019, allows a customer to trace a bag of coffee to its origins, an application frequently cited as a genuine use of the technology and one whose practical value to customers is modest.

Anand Varadarajan, from Amazon, became chief technology officer in January 2026.

Detailed history

The Il Giornale period

After leaving Starbucks in 1985, Howard Schultz spent a year raising approximately US$400,000 in seed capital and then US$1.65 million to open Il Giornale, named after the Milanese newspaper.

The first store opened in April 1986 in the Columbia Center in Seattle, serving espresso drinks made with Starbucks coffee, with standing counters, opera playing and Italian-labelled menus. It was, by Schultz's own account, too Italian: customers did not want to stand, did not want opera continuously and did not understand the menu. The chairs, the American names and the music variety followed.

Raising the money had been difficult. Schultz has said he approached 242 investors and was refused by 217, and the experience is a staple of entrepreneurship teaching.

Il Giornale had three stores when the opportunity arose to buy Starbucks in 1987, and Schultz raised the US$3.8 million principally from the same local investors, including Bill Gates senior, the father of the Microsoft founder, who assisted when a competing bidder attempted to take the deal.

Growth mechanics

Starbucks's growth from six stores in 1987 to more than 3,500 in 2000 and 16,000 in 2008 was achieved by a set of practices that have since been studied extensively.

Real estate. The company built an internal real estate organisation with unusual sophistication, using demographic and traffic data to select sites, and its willingness to pay above-market rents for corner locations with visibility became a factor in commercial property markets.

Cannibalisation. Opening a second store within sight of the first reduces the first's sales and increases the total, because queues shorten and because visibility compounds. The practice produced the jokes about a Starbucks across the street from a Starbucks, which were accurate and which described a deliberate policy.

Never franchise. Company operation in core markets preserved control and constrained capital, and the company financed growth from cash flow and from the 1992 listing rather than from franchisees' money.

Licensing where control is impossible. Airports, supermarkets and universities were licensed because the host controls the environment regardless, and international markets were entered with local partners where regulation, property or knowledge required it.

The 2008 crisis in detail

By 2007 the company was opening approximately six stores a day, American same-store sales had begun to decline, and the share price had fallen by half.

Schultz's February 2007 memorandum identified the causes precisely and the board did not act on it for eleven months.

His actions on returning in January 2008 included the closure of 600 American stores and 61 of 85 Australian stores; the cancellation of approximately 350 planned openings; the removal of approximately 1,000 corporate positions; the three-hour closure of every American store for retraining on 26 February 2008; the replacement of the tall La Marzocco Mastrena machines with lower models; the return of in-store grinding; the reintroduction of the Pike Place Roast as a daily brew; the launch of My Starbucks Idea, a public suggestion platform; and the leadership conference in New Orleans in October 2008 at which 10,000 managers were flown at a cost of approximately US$30 million while the company was cutting costs, a decision Schultz defended as necessary to restore belief.

The recovery was rapid. Same-store sales returned to growth in 2010 and the share price rose more than tenfold over the following decade.

Marketing

Starbucks spends comparatively little on advertising relative to its revenue, historically well under one per cent, which is very low for a consumer brand of its size.

The reason is that the stores are the advertising. Approximately 40,000 locations in prominent positions, each with the siren visible, constitute a marketing presence that television cannot match, and the cup carried through the street is a mobile advertisement that the customer pays for.

The marketing that exists is concentrated on:

Seasonal products. The Pumpkin Spice Latte from 2003 and the red holiday cups from 1997 generate very large quantities of unpaid coverage annually. The company's approach of returning the product on a specific date, announced in advance, creates an event.

The rewards programme, which delivers offers directly and which is a marketing channel rather than a discount scheme.

Social media, where the company was an early and effective participant, and where user-generated content, principally photographs of drinks, does the work.

Partnerships, including with Nestlé for packaged coffee, with PepsiCo for ready-to-drink beverages since 1994, and with Delta Air Lines, Marriott and others for loyalty programme linkages.

Cause marketing, including Ethos Water and the Create Jobs for USA programme, which has produced both goodwill and the criticism directed at Race Together.

Philanthropy and community

The Starbucks Foundation, established in 1997 with proceeds from Schultz's book, funds community organisations, and the company operates several programmes of some scale.

College Achievement Plan, from 2014, pays full tuition for an online bachelor's degree from Arizona State University for any employee working at least 20 hours a week, with no obligation to remain with the company. Tens of thousands have enrolled and several thousand have graduated. It is among the more substantial corporate education benefits offered by any American retailer and it is also, explicitly, a recruitment and retention instrument in a labour market where it competes for the same people as every other service employer.

Community Stores in underserved neighbourhoods direct a portion of sales to local organisations and are staffed with local hiring commitments.

Veterans and military spouses hiring, committed at 25,000 from 2013 and subsequently exceeded.

Opportunity Youth hiring, directed at young people not in education or employment, committed with a coalition of other employers.

Food donation through FoodShare, which distributes unsold food from American stores.

The programmes are substantial and they exist alongside the labour dispute, which is the tension the company has not resolved: a firm that pays for its employees' degrees and opposes their unionisation is making a specific argument about what the relationship should be, and the employees organising have rejected it.

Timeline

• 1971 The first store opens at 2000 Western Avenue, Seattle, on 31 March.
• 1976 The store moves to 1912 Pike Place.
• 1982 Howard Schultz joins as director of retail operations.
• 1983 Schultz visits Milan and conceives the café model.
• 1985 Schultz leaves and founds Il Giornale.
• 1987 Schultz buys Starbucks for approximately US$3.8 million and merges it with Il Giornale.
• 1988 Health benefits are extended to part-time employees.
• 1991 Bean Stock options are introduced.
• 1992 Lists on Nasdaq on 26 June at US$17.
• 1994 The Frappuccino line is acquired with The Coffee Connection; the PepsiCo ready-to-drink partnership begins.
• 1996 Opens in Japan, the first market outside North America.
• 1998 Enters the United Kingdom through Seattle Coffee Company.
• 1999 Opens in Beijing.
• 2000 Schultz steps down as chief executive; enters Australia.
• 2003 The Pumpkin Spice Latte is introduced; the Israeli stores close.
• 2004 C.A.F.E. Practices is introduced.
• 2007 Schultz's commoditisation memorandum leaks in February.
• 2008 Schultz returns in January; 600 American and 61 Australian stores close; every American store closes for three hours on 26 February.
• 2011 The wordmark is removed from the logo; mobile payment launches.
• 2012 Teavana is acquired; the British tax controversy breaks in October; Tata Starbucks launches in India.
• 2014 The Seattle Reserve Roastery opens; the College Achievement Plan begins.
• 2015 Mobile order and pay launches; Race Together is withdrawn.
• 2017 Kevin Johnson becomes chief executive.
• 2018 The Philadelphia arrests occur in April and 8,000 stores close for training in May; Nestlé pays US$7.15 billion for packaged coffee rights; the Milan Roastery opens in September.
• 2021 The Buffalo store votes to unionise on 9 December.
• 2022 Schultz returns as interim chief executive; Russia is exited.
• 2023 Laxman Narasimhan becomes chief executive in March; sales begin to decline in the United States and China.
• 2024 Starbucks Corp. v. McKinney is decided in June; Narasimhan is removed on 13 August; Brian Niccol is appointed.
• 2025 The open-door policy is reversed in January; approximately 1,100 corporate positions are cut in February; Back to Starbucks proceeds.
• 2026 The Boyu Capital joint venture for China is announced in January; a Nashville hub with approximately US$100 million of investment is announced in March.

The barista's job

Understanding the labour dispute requires understanding what the work actually involves, because it has changed substantially and the change is the dispute.

In 1995 a barista took an order at a register, pulled an espresso shot on a manual machine, steamed milk, assembled the drink and handed it over. The queue paced the work. Drinks were mostly hot and mostly simple. A typical store had a few staff and a few dozen drink combinations.

In 2025 a barista may be assembling a cold drink with four syrup pumps, a cold foam made to order, an alternative milk, extra ice and a specific quantity of caramel drizzle, one of several hundred thousand possible combinations, while the mobile order queue produces tickets continuously with no gap and no visible customer, while a drive-through timer counts, while a delivery courier waits, and while customers at the counter observe that nothing appears to be happening for them.

Each of the changes was individually sensible. Customisation raises the average ticket. Mobile ordering raises throughput and improves the customer's experience of ordering. Cold drinks are what people want and carry good margins. Delivery adds a channel.

Collectively they transformed the job from serving people into producing a continuous stream of complex items under timed observation, and the company's labour scheduling, which allocates hours by forecast transaction volume, did not account for the fact that a cold drink with cold foam takes several times as long as a drip coffee.

This is the substance of what the organising stores have said. It is also why the Siren System equipment redesign, the menu reduction and the four-minute standard are central to Niccol's programme: they are operational answers to a problem the union describes as a labour one, and both descriptions are of the same thing.

Financial detail

Starbucks reports on a financial year ending in late September or early October.

Revenue has risen from approximately US$4.1 billion in 2003 to US$10.7 billion in 2010, US$19.2 billion in 2015, US$26.5 billion in 2019, US$32.3 billion in 2022 and more than US$36 billion since.

Segments are North America, which produces roughly three-quarters of revenue and a higher share of operating profit; International, principally China, Japan, the United Kingdom and the licensed markets; and Channel Development, which holds the Nestlé royalty and the PepsiCo joint venture and which is very high margin.

Comparable store sales are the measure the market watches, and their decline in both the United States and China from 2023 produced the leadership change. The decline was driven by transactions rather than by price, meaning fewer visits rather than smaller ones, which is the more serious of the two.

Margin at store level runs in the twenties and consolidated operating margin in the mid-teens, both pressed since 2023 by wage increases, by coffee and dairy costs and by the investment in the turnaround.

Capital return. Starbucks has paid a dividend since 2010, raised annually, and has repurchased shares very heavily, which together with debt-funded buybacks has produced negative book equity, a position that is accounting rather than economic.

Stored value. Customer balances on cards and in the application have at times exceeded US$1.5 billion, an interest-free source of funding, and the portion never spent is recognised as income.

Notable products and menu history

1984 The first latte is served in a Starbucks store during Schultz's experiment.

1994 Frappuccino arrives with the acquisition of The Coffee Connection in Boston, whose owner George Howell had created the drink; it is now a line of dozens of variants and one of the company's largest.

1995 The first compilation album is sold in stores.

1997 The first holiday red cups appear.

2003 The Pumpkin Spice Latte is introduced after internal scepticism, and becomes the most commercially significant seasonal product in the industry.

2008 Pike Place Roast is introduced as a consistent daily brew.

2011 The Trenta size, at 916 millilitres, is introduced for cold drinks and attracts commentary for exceeding the capacity of the human stomach.

2012 Blonde Roast addresses the criticism of over-roasting; Refreshers introduce a non-coffee caffeinated line; Verismo home machines are launched and later discontinued.

2015 Cold brew is introduced nationally, beginning the shift that now dominates the menu.

2017 The Unicorn Frappuccino, a colour-changing drink available for one week, produces enormous social media coverage and substantial complaint from baristas about the difficulty of making it, and is among the clearest illustrations of the tension between marketing and operations.

2019 Nitro cold brew expands nationally; oat milk is trialled.

2021 Oat milk is introduced nationally after very large demand; the Baya energy line follows in January 2022.

2024 Iced Energy launches; lavender and pistachio platforms extend the flavour range.

2025 The menu is reduced substantially under Back to Starbucks, removing approximately 30 per cent of items.

Reception

Among customers Starbucks's position has weakened. American surveys since 2023 have recorded declining satisfaction, with waiting times, prices and the store environment the principal complaints, and the transaction decline confirms it.

Among coffee enthusiasts the company has been criticised since the 1990s for over-roasting, for excessive milk and sugar, and for homogenising a market. The counter-argument, made by several prominent figures in speciality coffee, is that Starbucks created the market they operate in, that a customer who will pay five dollars for a latte will eventually pay six for a pour-over, and that the third wave exists because Starbucks was the second.

Among employees the picture is divided in a way the union campaign expresses. The benefits are genuinely better than the industry's, the work has become harder, and pay has not kept pace with either.

Among investors the company was among the best-performing large consumer stocks for three decades and has underperformed since 2021, and the turnaround is being watched as a test of whether the brand's strength survives operational failure.

Among urbanists and economists Starbucks is a standard reference, as an indicator of gentrification, as an example of the experience economy, and as an illustration of how a commodity is transformed into a premium good through context rather than through the product.

Among the public generally the brand remains among the most recognised in the world and among the most politically contested, invoked as evidence of whatever the invoker wishes to demonstrate, which is a condition of ubiquity rather than a judgement.

Corporate affairs

Leadership

Howard Schultz was chief executive from 1987 to 2000, from 2008 to 2017 and as interim chief executive from April 2022 to March 2023, and chairman for most of the period. He is the company in a sense few founders are, having bought it rather than started it and having defined everything about it since. His memoirs, Pour Your Heart Into It and Onward, are widely read in business, and he considered a presidential candidacy in 2019 as an independent, which he abandoned after substantial criticism that it would divide the opposition to Donald Trump.

Orin Smith led from 2000 to 2005, Jim Donald from 2005 to 2008 during the overexpansion, Kevin Johnson from 2017 to 2022, Laxman Narasimhan from March 2023 to August 2024, and Brian Niccol since September 2024.

Niccol's appointment was unusual in its terms. His compensation package, reported at up to approximately US$113 million including a signing award, and an arrangement permitting him to work from Newport Beach, California, with a corporate aircraft for commuting, drew substantial comment at a moment when the company was reducing corporate headcount and opposing unionisation on cost grounds.

Headquarters and employment

The Starbucks Center in the SODO district of Seattle occupies a former Sears distribution building, with approximately 1.29 million square feet leased and around 3,750 corporate employees as of 2023, and is among the larger single-company office occupancies in the city.

The March 2026 announcement of a Nashville regional hub with approximately US$100 million of investment represents a departure from the single-headquarters model.

Starbucks employs approximately 380,000 people worldwide, the great majority in stores.

Finances

Revenue has grown from approximately US$700 million in 1996 to more than US$36 billion in recent years. Comparable store sales in the United States and China both declined through 2023 and 2024, which is the proximate cause of the leadership change and the turnaround programme.

The company has paid a dividend since 2010 and has conducted very large share repurchases, funded partly by debt, which reduced its equity to negative on the balance sheet, an accounting position that alarms observers unfamiliar with it and that is common among companies that have bought back more stock than their accumulated retained earnings.

The 2018 Nestlé transaction, US$7.15 billion for the perpetual rights to sell Starbucks packaged coffee, was the largest single financial event of recent years.

Cultural position

Starbucks occupies a place in Western culture disproportionate to its size, and the reasons are worth stating.

It made a previously inexpensive commodity into a premium purchase. The observation that a five-dollar coffee is a small luxury available daily to people who cannot afford large ones, sometimes called the latte factor after the personal finance writer David Bach used it as an example of discretionary spending, has made the company a standing reference in arguments about consumption, class and generational finance.

It standardised an experience across the world, so that a Starbucks in Shanghai, Santiago and Stockholm are recognisably the same, which is for some customers the point and for others the objection. Its name is used as shorthand for that standardisation, and the phrase Starbucks effect appears in urban economics, in linguistics and in discussions of cultural convergence.

It created a vocabulary that customers must learn and that is mocked, which is itself a form of engagement.

It has been used as a setting in a very large quantity of film and television, generally to indicate a particular kind of urban middle-class life, and it appears in The Simpsons, Austin Powers and elsewhere as a joke about ubiquity.

And it has become a reliable political symbol in the United States, invoked by the left as an example of corporate labour practice and by the right as an example of corporate progressivism, frequently in the same week.

Competition

Dunkin' competes in the United States at lower prices with a faster, less elaborate proposition and a franchised model, and is stronger in the Northeast.

McDonald's through McCafé competes on price and on drive-through convenience, and its coffee quality improved substantially from the mid-2000s specifically in response to Starbucks.

Luckin Coffee in China is the most consequential competitor the company has faced anywhere, having built more than 20,000 small pickup stores at roughly half the price, using an application-only ordering model with heavy discounting, and having overtaken Starbucks in both revenue and store count in the market that was its principal growth engine.

Independent and speciality cafés, frequently described as third wave, compete at the premium end on quality, on single-origin sourcing and on preparation, and the category exists substantially because Starbucks created a market for coffee costing several dollars.

Tim Hortons in Canada, Costa in the United Kingdom, owned by Coca-Cola, Pret A Manger, and regional chains across Asia including Cotti, Tim's China and a very large number of Korean and Japanese operators complete the field.

Home consumption competes as well, and the growth of home espresso machines and of pod systems has taken some occasions that would previously have been café visits.

Assessment

Starbucks created a category, exported it worldwide, and has spent fifteen years discovering that the thing it created is harder to sustain than it was to build.

The original insight was correct and was genuinely novel in the American context. People did not want coffee; they wanted somewhere to be, and would pay several dollars for the privilege of occupying a chair with a cup in front of them. The company built that at a scale nobody had attempted, and it changed what a substantial part of the world drinks.

The difficulty is that everything the company has done to grow has attacked the original proposition. Drive-throughs remove the place. Mobile ordering removes the interaction and overwhelms the staff. Complex customisation lengthens waits. Cold drinks dominate the menu and are made by assembly rather than by craft. Licensed stores in airports and supermarkets dilute the experience by definition. Each was individually sensible and collectively they produced the condition Schultz described in 2007 and that Niccol is addressing in 2025, which is that the company had stopped selling what it was supposed to be selling.

The labour question follows directly from the same tension. A business whose product is delivered by a person behind a counter cannot degrade that person's working conditions without degrading the product, and the unionisation campaign's specific grievances, understaffing against mobile order volume and unpredictable scheduling, are descriptions of exactly that.

Whether Niccol's programme works is a question about whether a company of 40,000 stores can be a third place at all, or whether the third place was a proposition that only worked at a few thousand.

Howard Schultz

Starbucks cannot be described without its dominant figure, who did not found it and who made it what it is.

Howard Schultz was born in 1953 in Brooklyn and grew up in the Bayview Houses, a public housing project in Canarsie. His father worked as a truck driver, a factory worker and a taxi driver, and was injured in 1961 while delivering nappies, losing his job, his income and his health coverage, an event Schultz has cited for fifty years as the origin of his views on employee benefits.

He attended Northern Michigan University on a football scholarship he did not use, worked at Xerox and then at Hammarplast, and joined Starbucks in 1982 against his employer's advice and at a substantial pay reduction.

His three tenures as chief executive, from 1987 to 2000, 2008 to 2017 and April 2022 to March 2023, and his periods as chairman, mean that he has directed the company for the great majority of its existence.

His arguments have been consistent. That the product is the experience and the experience is the person delivering it. That a company should behave toward its employees in a way that makes a union unnecessary, which is a position he has stated in exactly those terms, most consequentially in 2022 when he said that Starbucks had never had and did not need a third party between it and its people. That growth without conviction destroys a brand. And that a company has obligations beyond profit, which he has expressed through benefits, through the education programme and through a series of public interventions on race, guns, refugees and civic life.

The interventions have not generally gone well. Race Together was withdrawn in a week. The gun position satisfied nobody. The refugee commitment produced a boycott. His consideration of an independent presidential candidacy in 2019 produced sustained criticism that it would split the vote and was abandoned.

His conduct during the union campaign has been the most damaging to his own account of himself. A person whose stated founding principle is that the company should treat employees so well that a union is unnecessary, faced with employees who disagreed, responded with a campaign that administrative judges found unlawful in many particulars. Both facts are true and they do not reconcile, and the resulting argument about Schultz is substantially an argument about whether paternalism is a form of respect.

He resigned from the board in 2023 and has continued to comment publicly, including criticism of the company's direction, which the current management has received without enthusiasm.

Selected statistics

• Stores: more than 40,000 in more than 80 countries.
• Employees: approximately 380,000 worldwide.
• Revenue: more than US$36 billion.
• Coffee purchased: approximately 3 per cent of world production.
• Cups used: several billion annually.
• Rewards members: more than 30 million active in the United States.
• Mobile orders: approximately one third of American transactions.
• Cold beverages: approximately three quarters of American beverage sales.
• Drive-through: a majority of American transactions and of new store openings.
• Unionised stores: several hundred of approximately 10,000 company-operated American locations.
• Stored value balances: at times exceeding US$1.5 billion.

Legacy

Whatever happens to the company, three things it did will outlast it.

It established that a commodity can be sold at a large multiple of its cost if the context is right, which is now general practice across consumer goods and which is taught as the experience economy.

It created, in the United States and in a considerable number of other countries, a habit of drinking espresso-based coffee outside the home that did not previously exist, and the entire speciality coffee industry, including the competitors who criticise it, exists in the space it opened.

And it demonstrated, for approximately thirty years, that a large low-wage employer could offer health insurance, equity and tuition to part-time staff and remain among the most profitable companies in its sector, which was the principal counterexample in American arguments about retail employment. That it is now the most prominent site of an American unionisation campaign, and has responded to it as it has, does not remove the demonstration; it complicates the conclusion that was drawn from it.

See also

• Howard Schultz
• Luckin Coffee
• Dunkin' Donuts
• Coffeehouse
• Fair trade coffee
• Peet's Coffee