About Starbucks

Starbucks Corporation and its subsidiaries (Starbucks) operate as the premier roaster, marketer, and retailer of specialty coffee in the world, operating in 86 markets. The company purchases and roasts high-quality coffees that it sells, along with handcrafted coffee, tea and other beverages, and a variety of high-quality food items through company-operated stores. It also sells a variety of coffee and tea products and licenses its trademarks through other channels, such as licensed stores, as well as grocery and foodservice through its Global Coffee Alliance with Nestle S.A. (Nestle). In addition to the company's flagship Starbucks Coffee brand, it sells goods and services under the following brands: Teavana, Ethos, Starbucks Reserve, and Princi. The company works to uplift one another extends well beyond its partners to the communities where it does business around the world. It is committed to responsible and ethical sourcing led by Coffee and Farmer Equity Practices (C.A.F.E. Practices), the company's third-party verification program and the cornerstone of its approach to ethical sourcing of coffee with over 98% of its coffee having been historically verified through C.A.F.E. Practices as ethically sourced. Segments The company operates through three segments: North America, which is inclusive of the U.S. and Canada; International, which is inclusive of China, Japan, the Asia Pacific, Europe, the Middle East and Africa, Latin America and the Caribbean; and Channel Development. The company's North America and International segments include both company-operated and licensed stores. This segment is the company's most mature business and has achieved significant scale. Certain markets within its International operations are in various stages of development and may require more extensive support, relative to their levels of revenue and operating income, than its North America operations. The company's Channel Development segment includes roasted whole bean and ground coffees, Starbucks- and Teavana-branded single-serve products, a variety of ready-to-drink beverages, such as Frappuccino and Starbucks Doubleshot, foodservice products and other branded products sold worldwide outside of the company-operated and licensed stores. A large portion of the company's Channel Development business operates under a licensed model of the Global Coffee Alliance with Nestle, while its global ready-to-drink businesses operate under collaborative relationships with PepsiCo, Inc., Tingyi-Ashi Beverages Holding Co., Ltd., Arla Foods amba, Nestle and others. Revenue Components The company generates the majority of its revenues through company-operated stores and licensed stores. Company-Operated Stores The company's retail objective is to be the leading retailer and brand of coffee and tea in each of its target markets by selling the finest quality coffee, tea, and related products, as well as complementary food offerings, and by providing each customer with a unique Starbucks Experience. The Starbucks Experience is built upon superior customer service, convenience, and a seamless digital experience, as well as safe, clean, and well-maintained stores that reflect the personalities of the communities in which they operate, thereby building a high degree of customer loyalty. The company's strategy for expanding its global retail business is to increase its category share in a disciplined manner, by selectively opening additional stores in new and existing markets, as well as increasing sales in existing stores, to support its long-term strategic objective to maintain Starbucks standing as one of the most recognized and respected brands in the world. Starbucks company-operated stores are typically located in high-traffic, high-visibility locations. The company's ability to vary the size and format of its stores allows it to locate them in or near a variety of settings, including downtown and suburban retail centers, office buildings, university campuses and rural and off-highway locations. The company is continuing the expansion of its stores, particularly drive-thru formats that provide a higher degree of access and convenience, and alternative store formats, which are designed to provide a more streamlined customer experience in dense metropolitan areas. In 2022, the company announced its plan in the U.S. market to increase efficiency while elevating the partner and customer experience (the 'Reinvention Plan'). In the company's major international markets, it also continues to invest in technology and establish partnerships with third parties with relevant expertise to increase digital adoption to provide convenience and elevate the customer experience. Additionally, as the company's business has evolved, it has built an omni-channel business to meet more occasions as it serves a more diverse customer base through growth in online, e-commerce, delivery, mobile ordering, and the in-store experience. In China, the company leverages platforms, such as Starbucks Now stores to enable a seamless integration of physical and digital customer touchpoints. Orders may be placed in advance through the Starbucks Mobile App or Starbucks Delivers and can be conveniently picked up by customers and delivery providers in these express retail format locations. These strategies align closely with rapidly evolving customer preferences, including higher levels of mobile ordering, more contactless pick-up experiences and reduced in-store congestion. The company's investments in a digital third place offer members access to new benefits, a digital community, and immersive coffee experiences, giving its customers new ways to experience and connect with Starbucks. The company's continued efforts to transform its store portfolio and elevate technology will enhance the customer experience and position Starbucks for long-term growth. Stored Value Cards and Loyalty Program The Starbucks Card, the company's branded stored value card program, is designed to provide customers with a convenient payment method, support gifting and increase the frequency of store visits by cardholders, in part through the related Starbucks Rewards loyalty program where available. Stored value cards are issued to customers when they initially load them with an account balance. They can be obtained in its company-operated and most licensed stores in North America, China, Japan, and many of the company's other markets in its International segment. Stored value cards can also be obtained online, via the Starbucks Mobile App and through other U.S. and international retailers. Customers may access their card balances by utilizing their stored value card or the Starbucks Mobile App in participating stores. In nearly all markets, including the U.S. and Canada, customers who register their Starbucks Cards are automatically enrolled in the Starbucks Rewards program. Registered members can receive various benefits depending on factors, such as the number of reward points (Stars) earned. In addition to using their Starbucks Cards, Starbucks Rewards members can earn Stars by paying with cash, credit, or debit cards, or selected mobile wallets at all company-operated stores and a majority of licensed stores in North America. Using the Mobile Order and Pay functionality of the Starbucks Mobile App, customers can also place orders in advance for pick-up at certain participating locations in several markets. Licensed Stores Under the licensed model, Starbucks receives a margin on branded products and supplies sold to the licensed store operator along with a royalty on retail sales. In the company's licensed store operations, it seeks to leverage the expertise of its local partners and share its operating and store development experience. Licensees provide improved, and at times the only, access to desirable retail space. Most licensees are prominent retailers with in-depth market knowledge and access. As part of these arrangements, the company sells coffee, tea, food, and related products to licensees for resale to customers and receive royalties and license fees from the licensees. The company also sells certain equipment, such as coffee brewers and espresso machines, to its licensees for use in their operations. Licensee employees working in licensed retail locations are required to follow its detailed store operating procedures and attend training classes similar to those given to employees in company-operated stores. In a limited number of international markets, the company also uses traditional franchising and include these stores in the results of operations from its other licensed stores. Other Revenues Other revenues primarily are recorded in the company's Channel Development segment and include sales of packaged coffee, tea, and ready-to-drink beverages to customers outside of its company-operated and licensed stores, as well as royalties received from Nestle under the Global Coffee Alliance and other collaborative partnerships. Product Supply Starbucks is committed to selling the finest whole bean coffees and coffee beverages. Nestle controls distribution of Starbucks packaged coffee products outside of Starbucks stores through the Global Coffee Alliance, and in some cases, also roasts and packages these products. Trademarks, Copyrights, Patents, and Domain Names Starbucks owns and has applied to register numerous trademarks and service marks in the U.S. and in other countries throughout the world. Some of the company's trademarks, including Starbucks, the Starbucks logo, Starbucks Reserve, and Frappuccino are of material importance. The company owns numerous copyrights for items, such as product packaging, promotional materials, in-store graphics, and training materials. It also holds patents on certain products, systems, and designs, which have an average remaining useful life of approximately five years. In addition, Starbucks has registered and maintains numerous Internet domain names, including 'Starbucks.com,' 'Starbucks.net', and 'Starbucksreserve.com'. Seasonality The company's business is subject to moderate seasonal fluctuations, of which its second fiscal quarter (year ended October 2023) typically experiences lower revenues and operating income. Additionally, as Starbucks Cards are issued to and loaded by customers during the holiday season, it tends to have higher cash flows from operations during the first quarter of the fiscal year. However, since revenues from Starbucks Cards are recognized upon redemption and not when cash is loaded onto the Card, the impact of seasonal fluctuations on the consolidated statements of earnings is much less pronounced. History Starbucks Corporation was founded in 1971. The company was incorporated in 1985.