Starbucks

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For other meanings of the name "Starbuck", see Starbuck.

Starbucks Corp.
Type	Public (NASDAQ: SBUX,SEHK: 4337)
Founded	In 1971 across from Pike Place Market in Seattle, Washington
Headquarters	Seattle, Washington, USA
Key people	Howard Schultz, Chairman Jim Donald, President & CEO
Industry	Restaurants
Products	Starbucks Seattle's Best Coffee Frappuccino Tazo Tea Torrefazione Italia Coffee Starbucks Hear Music Pasqua Coffee
Revenue	$6.369 billion USD (2005)
Employees	125,000
Website	Starbucks.com

Starbucks is the world's largest multinational chain of coffee shops.^[1][2] Founded in 1971 as a coffee bean retailer, then acquired in 1987 by Howard Schultz, it has acquired and built coffeehouses all over the world. In addition to drip brewed coffee and espresso beverages, Starbucks shops also serve tea and bottled beverages, pastries, and ready-to-eat sandwiches. Some Starbucks stores are inside other retail locations such as supermarkets and bookstores (though these stores are only licensed and not owned or operated by the company).

Contents 1 Starbucks Corporation 1.1 History 1.2 Today 1.3 Name and logo 2 Starbucks stores 2.1 Cup sizes 2.2 Language 2.3 Frappuccino 2.4 Staffing 2.5 Marketing 3 Other products 3.1 Hear Music 4 Criticism and controversy 4.1 Retail market 4.2 Green bean market 4.3 Trademark litigation 4.4 Religious groups 5 See also 6 References 7 External links

[edit] Starbucks Corporation

Starbucks' corporate headquarters are in Seattle, Washington, United States. Currently the members of the company's board of directors are Jim Donald, Barbara Bass, Howard Behar, Bill Bradley, Mellody Hobson, Olden Lee, Greg Maffei, Howard Schultz, James Shennan, Javier Teruel, Robert Marsee, Myron Ullman, and Craig Weatherup.

Starbucks U.S. Brands, LLC is a Starbucks owned company that currently holds and owns the property rights to approximately 120 Starbucks Coffee Company patents and trademarks. It is located at 2525 Starbucks Way in Minden, Nevada.^[3]

[edit] History

The first Starbucks was opened in Seattle, Washington in 1971 by three partners—English teacher Jerry Baldwin, history teacher Zev Siegel, and writer Gordon Bowker. The three were inspired by Alfred Peet, whom they knew personally, to open their first store in Pike Place Market to sell high-quality coffee beans and equipment. The original Starbucks location was at 2000 Western Avenue from 1971 to 1976. That store then moved to 1912 Pike Place. During their first year of operation, they purchased green coffee beans from Peet's, then began buying directly from growers.

Entrepreneur Howard Schultz joined the company in 1982, and, after a trip to Milan, suggested that the company sell coffee and espresso drinks as well as beans. The owners rejected this idea, believing that getting into the beverage business would distract the company from its focus. To them, coffee was something to be prepared in the home. Certain there was much money to be made selling drinks to on-the-go Americans, Schultz started the Il Giornale coffee bar chain in 1985.

In 1984, the original owners of Starbucks, led by Baldwin, took the opportunity to purchase Peet's. (Baldwin still works there today.) In 1987 they sold the Starbucks chain to Schultz's Il Giornale, which rebranded the Il Giornale outlets as Starbucks and quickly began to expand. Starbucks opened its first locations outside Seattle in Vancouver, British Columbia, Canada (at Waterfront Station) and Chicago, Illinois, United States that same year. At the time of its initial public offering on the stock market in 1992, Starbucks had grown to 165 outlets.

The first Starbucks location outside of North America opened in Tokyo in 1996. Starbucks entered the UK market in 1998 with the acquisition of the then 60-outlet Seattle Coffee Company, re-branding all its stores as Starbucks. By November 2005, London had more outlets than Manhattan,^[4] a sign of it becoming an international brand.

In April 2003, Starbucks completed the purchase of Seattle's Best Coffee and Torrefazione Italia from AFC Enterprises, bringing the total number of Starbucks-operated locations worldwide to more than 6,400. On September 14, 2006, it was announced by rival Diedrich Coffee that it would sell most of its company-owned retail stores to Starbucks. This sale includes the company owned locations of the Oregon-based Coffee People chain. Starbucks representatives have been quoted as saying they will convert the Diedrich Coffee and Coffee People locations to Starbucks stores.

[edit] Today

According to the company fact sheet, as of November 2006, Starbucks had 7,102 company-operated outlets worldwide: 5,668 of them in the United States and 1,434 in other countries and U.S. territories. In addition, the company has 5,338 joint-venture and licensed outlets, 3,168 of them in the United States and 2,170 in other countries and U.S. territories. This brings the total locations (as of November, 2006) to 12,440 worldwide. Stores are now found in Australia, Austria, Bahamas, Bahrain, Brazil, Canada, Chile, China, Cyprus, Egypt, France, Germany, Greece, Hong Kong, Indonesia, Ireland, Japan, Jordan, Kuwait, Lebanon, Malaysia, Mexico, New Zealand, Oman, Peru, Philippines, Puerto Rico, Qatar, Saudi Arabia, Singapore, South Korea, Spain, Switzerland, Taiwan, Thailand, Turkey, United Arab Emirates, and the United Kingdom.

In some cities there are Starbucks stores located across the street from each other. The highest Starbucks in the world is in the Stratosphere in Las Vegas, Nevada. Starbucks uses the cup sizes of tall, grande and Venti because no one wants to go inside the store and ask for a "small"

[edit] Name and logo

The company was in part named after Starbuck, the coffee-loving first mate character in the book Moby-Dick, as well as a turn-of-the-century mining camp on Mount Rainier, Starbo or Storbo. According to Howard Schultz's book Pour Your Heart Into It: How Starbucks Built a Company One Cup at a Time, the name of the company was derived from Moby-Dick, although not in as direct a fashion as many assume. Gordon Bowker liked the name "Pequod" (the ship in the novel), but his creative partner Terry Heckler objected: "No one's going to drink a cup of Pee-quod!" Heckler suggested "Starbo." Brainstorming with these two ideas resulted in the company being named for the Pequod's first mate, Starbuck.^[5]

The company logo is a "twin-tailed mermaid, or siren as she's known in Greek mythology".^[6] The logo has been streamlined over the years. In the first version, the Starbucks siren had bare breasts and a fully-visible double fish tail. In the second version, her breasts were covered by hair, but her navel was still visible, and the fish tail was cropped slightly. In the current version, her navel and breasts are not visible at all, and only vestiges remain of the fish tails. The original logo can still be seen on the Starbucks store in Seattle's Pike Place Market and on Starbucks Anniversary Blend 1 lb coffee bags.

At the beginning of September 2006, Starbucks temporarily reintroduced their original brown logo on paper hot beverage cups. Starbucks has stated that this was done to show the company's heritage from the Pacific Northwest and to celebrate 35 years of business, however the vintage logo has sparked some controversy due to the siren's bare chest.^[7] Recently, an elementary school principal in Kent, Washington was reported as asking teachers to "cover up" the mermaid of the retro cups with a cup sleeve of some kind.

[edit] Starbucks stores

Starbucks stores serve a variety of brewed coffees, which change on a weekly basis in order to provide customers with an easy way to sample a variety of coffees and blends. Also served are an array of other hot drinks, both espresso-based (like lattes and cappuccinos) and non-espresso based (like hot chocolate, hot white chocolate, steamed cider, and "cremes", Starbucks' term for steamed milk with various flavored syrups added). During winter months the hot drinks are the main staple for Starbucks. However, during the warmer months most of its revenue does not come from coffee, but from Frappuccino blended coffees and blended cremes. These drinks are made from a base plus syrup and ice. Stores in Seattle, Chicago, Maryland, and other areas are experimenting with hot breakfast options such as ham, egg, and cheese on a muffin and eggs Florentine sandwiches.

Starbucks' whole-bean coffee is roasted in one of four roasting plants, located in Kent, Washington; York, Pennsylvania; Carson Valley, Nevada; and Amsterdam, Netherlands. These whole beans are packaged shortly after roasting and are shipped in air-tight bags which incorporate a pressure valve allowing the beans to continue to emit gases after packaging. Whole beans, and some varieties of packaged pre-ground beans, are available for purchase at all Starbucks store locations and in many grocery stores.

Starbucks is known for the jargon of its menu, substituting "tall," "grande," and "venti" (Italian for "twenty") for the more traditional^{[citation needed]} "small," "medium," and "large" (the smallest size, the 8 oz. "short," can be ordered at any Starbucks, but is not listed on North American menus). Additionally, as in all coffee shops, most coffee drinks can be customized in some way (e.g. using skim milk instead of whole milk for a "nonfat" option, or mixing regular and decaffeinated coffee to make a "half-caf"). Flavored syrups and whipped cream can be added; cappuccinos can be made with more foam ("dry") or less foam ("wet"). Other options include "extra hot" and "soy."

In China, only "short", "tall", and "grande" sizes are available. There is no "venti" size. In Japan, "venti" size availability for hot drinks is limited to few stores.

[edit] Cup sizes

Customers can choose from one of four cup sizes for hot drinks, or one of three cup sizes for cold drinks (including Frappuccinos):

Starbucks cup sizes

Starbucks size name	Size Name Elsewhere	Volume of hot beverage	Volume of iced beverage
Short	Kids/Extra Small	8 oz.	8 oz.
Mezzo - Tall/Iced Tall	Small	12 oz.	12 oz.
Grande/Iced Grande	Medium	16 oz.	16 oz.
Venti/Iced Venti	Large	20 oz.	24 oz.

In Quebec, Canada, the Short size is referred to as piccolo, while the Tall size is referred to as mezzo, continuing the Italian naming trend. Typically, Short is not displayed as a size on the menu.

[edit] Language

The lingo used at Starbucks is designed for efficient communication between employees and with customers while ordering drinks or "marking the cups." There is a prescribed order in which to say each modifier, ending with the name of the drink itself. Ordering a drink may begin with whether or not the drink is iced, whether it is decaffinated, the number of shots of espresso (if different from the standard recipe for that drink), the size of the cup, any flavoring added, the kind of milk requested, (eg. non-fat milk, organic milk, breve, heavy cream, or soy milk), any additional customizations (e.g. no foam, extra hot) and finally the name of the beverage.

For example, the order of an iced latte, grande, with vanilla syrup, decaf, with whipped cream, skimmed milk, and an extra shot, would be called as an "Iced Decaf Triple Grande Vanilla Non-fat (or Skim) with whip latte."

In other words, you simply say iced if it is a cold beverage, or nothing if it is hot, which is default, and then read the down the list of modifiers listed on the side of the cup.

If not otherwise specified, drinks are made hot, with caffeinated espresso and whole milk. The basis for all "bar" or espresso based drinks is the latte, which consists of espresso, steamed milk, and a dollop of foamed milk. From there exist variations such as the cappuccino (with espresso, and a heavy cap of foam), and the caramel macchiato (with vanilla syrup, steamed milk, a 1/2 inch layer of foamed milk which is added so that it can "hold" the shots of espresso poured over top, and the caramel sauce in a cross-hatch pattern).

[edit] Frappuccino

Starbucks is known for its signature Frappuccino, a flavored drink of coffee, milk and sugar blended with ice. The name is a portmanteau of “frappé” and “cappuccino,” and was introduced in 1995. Frappuccinos were actually invented by a barista experimenting with iced beverages. There are two main types, blended creams and blended coffees. Some stores even offer new frappuccino juice blends as a dairy and coffee alternative.

[edit] Staffing

There are usually two to four baristas (or "partners," as Starbucks employees are called) in each store at any one time with at least one being a Shift Supervisor, Assistant Manager or Store manager, depending on the business volumes. Baristas in black aprons are "Coffee Masters". These aprons are worn by partners who have completed the Coffee Master course and achieved a high standing during their certification, which educates partners in not only the tasting, but also growing, roasting and purchasing (including fair trade practices) aspects of the coffee industry.

It was policy in the past that a partner be a shift supervisor, assistant store manager, or store manager in order to become a Coffee Master. Starbucks has recently changed this stance and now allows all partners the opportunity to become a Coffee Master.

Most stores are internally divided into:

1. the floor, where the baristas work and serve customers
2. the back of house, which consists of the storeroom
3. the cafe, which consists of the cafe itself and the bathrooms, and so on

Behind the counter, the floor is divided into three distinct sections for "deployment" or working in stations throughout one's shift:

1. The POS (Point of Sale or cash register): This is where orders are placed, called, and paid for. Pastries are served from here as well as brewed coffees and teas.
2. The Beverage Station: This area is usually broken down into two sections, the Espresso Bar and the Cold Beverage Station. The Espresso Bar is where most hot beverages are made, even if they don't require espresso shots, except for the Coffee of the Week and brewed tea. The Cold Beverage Station is where Frappuccino drinks and iced teas and coffees are made and served. If there is a high demand for cold drinks there may be a barista specifically for the Cold Beverage Station, otherwise a single barista handles the whole Beverage Station, with help from the floater barista if necessary. Many newer stores have a dual-Espresso Bar setup, sometimes called a "W" bar or a "Bent" bar, named for the shapes the bars create when seen from the customers' perspective. These are used at higher volume stores (mostly those with drive-thrus) so multiple Baristas can be on bar at once during the heavy rushes.
3. The Digital Brewer and Pastry Case: These are usually placed close to each other on the opposite side of the register from the Espresso Bar. The Digital Brewer is where all the Coffees of the Week are brewed and served. This is never a primary position, unlike the others, since it is a low-demand, low-difficulty station, and is usually handled by the barista operating the register or by the floater.

The three primary roles that baristas take on (and swap off on during a shift) are thus POS (register), bar (making and serving drinks), and floater (miscellaneous duties including making Frappuccino beverages and "café", the duty of cleaning tables and otherwise taking care of the customer area.) The floater will also expedite the line by calling drinks to the bar so that they can be ready by the time the customer has finished paying.

Some stores might also have a barista at the Frappuccino bar or a barista at the back of the store. Busy stores might even have two baristas at one station, especially at the espresso bar on busy days or at the Frappuccino station during the summer. If the Starbucks has a drive-through, it may have one to four baristas assigned solely to serve customers in drive-through. Drive-through stores will always have higher staffing levels simply because of the unique situation that is created by trying to serve both cafe and DT customers at once.

A regular shift's workers include the baristas and the shift supervisor, often a more experienced barista promoted to the position. The shift supervisor (just "shift" for short) is in charge of running the store when the manager is not working. The "shift" also will take on the role of floater as necessary to resolve bottlenecks.

Starbucks offers full benefits such as health and vision insurance as well as stock-option grants and 401k with matching to employees who put in as few as 20 hours a week. In 2006 Starbucks was voted the twenty-ninth best company to work for in the United States.^[8] In 2005, it was voted the eleventh best.

[edit] Marketing

Starbucks' marketing strategy involves positioning the local Starbucks outlet as a "third place" (besides home and work) to spend time, and the stores are designed to make this easy and comfortable. The café section of the store is often outfitted with comfortable stuffed chairs and tables with hard-backed chairs. There are ample electrical outlets providing free electricity for patrons using or charging their portable music devices or laptop computers. Most stores in the U.S. and in some other markets also have wireless Internet access (although this access is not free, as it is in some independent coffee shops).

The company is noted for its non-smoking policy at all its outlets, despite predictions that this would never succeed in markets such as Germany, where there are otherwise few restrictions on smoking. Outlets in Vienna and Mexico City, which have smoking rooms separated by double doors from the coffee shop itself, are the closest the company has come to making an exception. According to the company, the smoking ban is to ensure that the coffee aroma is not adulterated. The company also asks its employees to refrain from wearing strong perfumes for similar reasons. Starbucks generally does not prohibit smoking in outside seating areas.

Starbucks does not generally offer promotional prices on its products. It has a reputation for having pricey drinks, though as of early 2006, Dunkin' Donuts charged even more for a large cup of coffee ($1.95 vs. $1.80 at Starbucks).^[9] In late 2006, Starbucks announced that it would raise prices by $0.05 USD,^[10] at the beginning of the new fiscal year, October 2, 2006.

[edit] Other products

Starbucks recently entered the music and film business. Starbucks Entertainment is one of the producers of the 2006 film Akeelah and the Bee. Retail stores heavily advertised the film before its release.

[edit] Hear Music

Main article: Hear Music

Hear Music is the brand name of Starbucks' retail music concept. Hear Music began as a catalog company in 1990 and was purchased by Starbucks in 1999. The Hear Music brand currently has four components:

1. the music that each location plays and the accompanying XM radio channel (XM 75)
2. in-store CD sales, including Starbucks exclusives
3. specially branded retail stores
4. sales through the iTunes Store

The first Starbucks Hear Music Coffeehouse is in Santa Monica, California on the Third Street Promenade, and two more locations recently opened, one opened December 2005 on the River Walk in San Antonio and another opened in February 2006 in Miami, Florida's South Beach. Another location will be opening just in time for the holiday shopping season in Bellevue, Washington's resort shopping destination, The Bellevue Collection. There is also a Hear Music Store in Berkeley, California. Ten Starbucks locations in Seattle and Austin, Texas also have Hear Music "media bars," kiosks that lets customers create their own mix CDs. The music section in Chapters, a Canadian bookstore chain, was at one time a licensed version of the Hear Music concept, but Chapters no longer uses the brand name.

[edit] Criticism and controversy

Starbucks' size, global presence, and notoriety has given it considerable influence in domestic coffee retailing and global green bean purchasing. As one of the most recognized coffee brands, the company is also is subject to measurable public visibility, scrutinty and sometimes criticism.

[edit] Retail market

Starbucks has come to be regarded by some, particularly in the anti-globalization movement, as symbolic of the problems posed by globalization. Several activist groups maintain websites criticizing the company's fair-trade policies, labor relations, and environmental impact, and hold it as a prime example of what they see as U.S. cultural and economic imperialism. Several Starbucks locations were vandalized during the WTO meeting held in Seattle in late 1999. Although no organization claimed responsibility for the vandalism, the anarchist circle-A sign was spraypainted on several stores.^[11] (see also WTO Ministerial Conference of 1999 protest activity).

[edit] Green bean market

Although it has endured much criticism for its purported monopoly on the global coffee-bean market, Starbucks only accounts for roughly two percent of global coffee production[2]. In 2000, the company introduced a line of fair trade products^[12] and now offers three options for the socially conscious coffee drinker. According to Starbucks, they purchased 4.8 million pounds of Certified Fair Trade coffee in fiscal year 2004 and 11.5 million pounds in 2005. They have become the largest buyer of Certified Fair Trade coffee in North America (10% of the global market) and the only company licensed to sell Certified Fair Trade coffee in 23 countries.^[13] Transfair USA,^[14] the only third-party certifier of Fair Trade Certified coffee in the United States, has noted the impact Starbucks has made in the area of Fair Trade and coffee farmer's lives by saying:

Since launching FTC coffee in 2000, Starbucks has undeniably made a significant contribution to family farmers through their rapidly growing FTC volumes. By offering FTC coffee in thousands of stores, Starbucks has also given the FTC label greater visibility, helping to raise consumer awareness in the process. FTC coffee now represents 3.7% of all Starbucks coffee, up from less than 1% when the company began to offer FTC. Starbucks unlike many companies with whom we partner, makes FTC volume information public.[15]

Groups such as Global Exchange are calling for Starbucks to further increase its sales of fair trade coffees. However, fair trade certification can cost $20,000 to $30,000, and many growers are unwilling or unable to pay for certification. As a result, the supply of fair trade coffee is increasing slowly, and Starbucks claims difficulty in finding fair trade growers that can meet its quality standards^{[citation needed]}.

On October 26, 2006, Oxfam accused Starbucks of asking the National Coffee Association to block a trademark application from Ethiopia for two of the country's coffee beans, Sidamo and Harar. They claim this could result in denying Ethiopian coffee farmers potential annual earnings of up to £47m. Starbucks denied initiating opposition to the trademark application and stated the NCA had actually expressed concerns to Starbucks, and not the other way around. Starbucks also went on record saying they do not oppose the Ethiopian government's patent application and on October 25 sent a letter to the Ethiopian government offering to support and help them develop and implement a certification program. Robert Nelson, the head of the NCA, confirmed his organization, and not Starbucks, initiated the opposition.^{[16] [17]}

[edit] Trademark litigation

In 2000 San Francisco cartoonist Kieron Dwyer was sued by Starbucks for copyright and trademark infringement after creating a parody of its siren logo and putting it on coffee mugs, t-shirts and stickers that he sold on his website and at comic book conventions. Dwyer felt that since his work was a parody it was protected by his right to free speech under U.S. law. The judge agreed that Dwyer's work was a parody and thus enjoyed constitutional protection, however he was forbidden from financially profiting from using a "confusingly similar" image of the Starbucks siren logo. Dwyer is currently allowed to display the image as an expression of free speech, but he can no longer sell it. [3]

Starbucks also made headlines in Canada for its litigation against Haida Bucks,^[18] an indigenous-owned coffee house and store located in Masset, a small town on the remote island of Haida Gwaii. The case was dropped by Starbucks after the owners of Haida Bucks resisted Starbucks' attempt at litigation.

[edit] Religious groups

In 2005, the company began to print quotations on its paper coffee cups. One of these drew criticism from fundamentalist Christian groups including Concerned Women for America who seek to "bring Biblical principles into all levels of public policy".^[19] The controversial quote was:

The Way I See It #43: My only regret about being gay was that I repressed it for so long. I surrendered my youth to the people that I feared when I could have been out there loving someone. Don't make that mistake yourself. Life's too damn short.

Although the other cups promoted a diverse range of ideas, mostly fundamentalist Christian critics singled out this quotation for allegedly promoting homosexuality. The Starbucks at Baylor University in Waco, Texas, removed cups featuring the Maupin quote after complaints from a staff member. Starbucks, however, has no plan to pull the cup from the program. Concerned Women for America have also objected to Starbucks including Planned Parenthood in their employee matching funds program.^[20]

[edit] See also

• Coffeehouse
• List of coffeehouse chains

[edit] References

[edit] External links

• Official website
• Starbucks Corporate Strategy Analysis

Starbucks Corporation
Corporate Directors: Jim Donald | Barbara Bass | Howard Behar | Bill Bradley | Mellody Hobson | Olden Lee | Greg Maffei | Howard Schultz | James Shennan | Javier Teruel | Myron Ullman | Craig Weatherup
Assets & Products: Starbucks Entertainment | Hear Music | Pasqua Coffee | Seattle's Best Coffee | Tazo Tea Company | Torrefazione Italia
Annual Revenue: $6.4 billion USD (25% FY 2005) | Employees: 96,700 | Stock Symbols: NASDAQ: SBUX HKSE: 4337 | Website: www.starbucks.com