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How Starbucks Became An $80B Business

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In its 47-year history, Starbucks has transformed from a single coffee bean store in Seattle to a 30,000 cafe international coffee power house. But massive expansion hasn't come without growing pains. It's no secret that Starbucks has been struggling to get U.S. customers to frequent its cafes more often. While sales have been positive, the number of customer visits continues to stagnate. Same-store sales, a key metric in the restaurant industry, have dwindled over the last 12 months as competition heated up and customers were uninspired by some of Starbucks' limited-time offerings. While comparable-store sales exceeded expectations in the fourth quarter that ended Sept. 30, rising 4 percent, much of that was due Starbucks charging more for its lattes. Under the careful watch of Howard Schultz, Starbucks pursued a strategy of aggressive expansion in the late '80s and early '90s. By the time the company went public in 1992, it had 165 stores. Four years later, Starbucks opened its 1,000th location, including international cafes in Japan and Singapore. Growth was so rapid that, just two years later, Starbucks opened its 2,000th cafe. While unit expansion helped boost sales throughout the last two decades — Starbucks has had positive same-store sales growth since 2010 — the company has now spread itself too thin. With more than 14,000 locations in the United States alone today, Starbucks has cannibalized its own sales. The company is regrouping and rethinking its expansion. It is expected to shutter 150 underperforming locations in 2019, three times the amount it typically does. Compounding its problems are changing consumer preferences, an issue CEO Kevin Johnson has addressed with investors. People are shying away from sugar-laden calorie bombs, which happen to be one of Starbucks' staples. In 2015, sales of Frappuccinos were 14 percent of Starbucks revenue. However, in the first half of 2018, Frappucino sales were down 3 percent — and accounted for only about 11 percent of the company's revenue. Making matters worse, Frappuccino sales also were hurt by a lack of innovation, analysts said. » Subscribe to CNBC: http://cnb.cx/SubscribeCNBC About CNBC: From 'Wall Street' to 'Main Street' to award winning original documentaries and Reality TV series, CNBC has you covered. Experience special sneak peeks of your favorite shows, exclusive video and more. Connect with CNBC News Online Get the latest news: http://www.cnbc.com/ Follow CNBC on LinkedIn: https://cnb.cx/LinkedInCNBC Follow CNBC News on Facebook: http://cnb.cx/LikeCNBC Follow CNBC News on Twitter: http://cnb.cx/FollowCNBC Follow CNBC News on Google+: http://cnb.cx/PlusCNBC Follow CNBC News on Instagram: http://cnb.cx/InstagramCNBC #CNBC #Starbucks How Starbucks Became A $80B Business
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Text Comments (777)
BeatingBros (9 hours ago)
Tim Hortons is better
Anderson de souza (4 days ago)
eu amo café ☕ ❤
jack Watsonepic (7 days ago)
Free Wi-Fi When you paying £4 for a cup of coffee? Just shows you how many thick people they are just to keep up with the Joneses I would rather go to Aldi's and buy. 2 300g jars of coffee for the price of one cup in Starbucks because I live in the real world.
E-MAN (15 days ago)
This was awesome
Antatiksh K (19 days ago)
Tata owns it
doctorbashar (22 days ago)
Selling water , that’s how
Rikesh Patel (25 days ago)
cnbc has made this video 10 different times
Harman Enterprises (26 days ago)
Now Starbucks is taking a page from businesses like Blue Bottle whose coffee is far superior! I always felt as though Starbucks coffee had a burnt taste to it. They’re even copying Blue Bottle’s approach to having those glass coffee filtering devices that liken the environment to a science lab.
Vitalii (29 days ago)
I visited first time in many years , paid $3.35 for regular coffee, never again 🤣
Pierronimo (30 days ago)
In France, coffee is considered as a cheap popular stuff not luxury at all and we only drink small shots of espressos. And it ranges from 1 euros to 2 euros. It is also a social product that you drink with your colleagues and pay for them because it's so cheap ("May I offer you a coffee?"). You don't want to pay for them if it's a starbuck though... can't spend 10 euros on 2 coffees... This is why there's only 170 starbucks in France (80% of them in Paris and targeting the tourists) compare to 1000+ in the UK.
애플사장 (1 month ago)
People are drinking not a Coffee but the mood Starbucks provides
goWise Languages (1 month ago)
if you look close, its crazy to spend 12 bucks on coffee... but can't deny that going to starbucks is a nice experience, you get your name on the cup, get a smile from the barista, the wifi password and the hippies with their macs. pretty urban
Vill Bill (1 month ago)
I prefer coffee bean
Shwetha Jagannath (1 month ago)
Background Music is too loud. :(
Chang Gao (1 month ago)
The quality is consistent
King's React Gaming (1 month ago)
White girls and overpriced coffee, so that’s a flex if you’re drinking Starbucks
Michael Dabellus (1 month ago)
Their coffee is bitter...prefer Dunkin
Butterfly (1 month ago)
I don’t get the hype here in Germany we have good alternatives I think so Starbucks is not my preference
A dina (1 month ago)
Most people who get Starbucks coffee do it mainly to show off!
I l (1 month ago)
1. Bad coffee 2. Expensive 3. Unsafe Wlan (get your creds stolen) 4. WTF?
Miss MissyX (1 month ago)
But there are no *commercials*
Brand Diaries (2 months ago)
https://youtu.be/yJ75nDiFcRE
H C (2 months ago)
Why is the music at the end so loud. Can barely hear the narrator.
Thy Ngo Ngoc Mai (2 months ago)
what is the background music
Andy Dany (2 months ago)
Favorite restaurant and franchise
Andres Rodriguez (2 months ago)
How to be rich 1. Put a Starbucks on a college campus 2. Wait
Gustav Peter (2 months ago)
We have Starbucks coffee on campus. However, I always buy the coffee for £1,20
Kratagya Agarwal (2 months ago)
Starbucks became an $80 billion company because 100 million fools bought a $4 coffee ,200 times a year Do the Maths.
Dayton Stockwell (2 months ago)
The first international Starbucks was in Vancouver BC lmao
Krystal Bizx (2 months ago)
Why not make your coffee at home for under $0.25? Saving your daily $5 coffee fund instead and putting it into an ETF or Mutual fund you'll have $36,727 in savings in just 10 yrs with at least a 10% ROR ---- the beauty of compound interest. Most ETFs and Mutual funds do better than 10%....so even better.
Shermta F (3 months ago)
I wonder where did I get a coffee beans from
KennethSNSDSone SMTOWN (3 months ago)
*it saddens me when founders aren't part of this company anymore. 😥*
KennethSNSDSone SMTOWN (1 month ago)
@fnihp30 based on the video, they sold all their shares in the company tho... 🤷‍♀️
fnihp30 (1 month ago)
Perhaps they don’t want to be. Besides, who said they didn’t still own shares of Starbucks...
Scott OBrien (3 months ago)
Great video 👍🏽, putting dublin on the map aswell 😅😉 @5:32
kevin ltr (3 months ago)
bonjour les 1eresSTMG2
mary jane (3 months ago)
I'm proud to say that I haven't bought a Starbucks drink in over 10 years
Gabe B (3 months ago)
Did she say eXpresso? I even rewinded to listen again coz I couldn’t believe my ears 😂 and there it was again.. “eXpresso machines” Guuuuurl!
Angelo Flores (3 months ago)
that CEO is really a hardworking and have passion in his expertise
Yaro Berlishenko (3 months ago)
Omg did she say EXPRESSO?..... Uuughhhhh
Aman singh (3 months ago)
Starbucks,now a tata company
Syarifah Maqhfirah Arsali (4 months ago)
Is Starbuck part of START-UP COMPANY? If no, why they success?
Hypax (4 months ago)
Lol i work there so i get unlimited free drinks
SSM 11 (4 months ago)
Starbucks pricing culture - Real Price of coffee +Price for hype + tip
Chris M (4 months ago)
Starbucks failed here in Australia at first, because of its below average coffee. Seems to have come back and be quite popular since the recent surge of Chinese and Asian immigration.
saeed mousavizadeh (4 months ago)
07:04
viktor m (4 months ago)
Couldn't make it in Australia apparently the corner cafes makes REAL coffee
FuddyduddyBella (4 months ago)
I get a venti for free every time I go!!! Cause I work there. 😅
Alejandra Salgado (4 months ago)
I'm watching this as I'm in Starbucks 😂
Abu Feras Abdullah (4 months ago)
Great reporting, albeit the annoying music
Timothy J. Roberts (4 months ago)
I really want tp visit the Japan Reserve Roastery. It looks awesome. Theres a good video on youtube on that location.
God (4 months ago)
Doesn't matter how expensive it is if it's actually good
arturo j guzman (5 months ago)
Let’s face it, yes ! Over priced coffee, but is worthy ! A variety of good coffee, professional baristas , good sandwiches and snacks, attractive place and ambience, I have tried different coffee places, nobody makes coffee like Starbucks !
Cameron C (5 months ago)
Costa Fans?
パンの耳ライオン (5 months ago)
Their coffee tastes like poo.. I'm good.. I'll go somewhere else.. ANYWHERE ELSE! Dennys has better coffee than this place
Jekku (5 months ago)
I'm SO SICK TO DEATH of Starf*x! BRING BACK THE MOM & POP COFFEE SHOPS!!! And STOP SAYING EXPRESSO, YOU IDIOT! If you're going to talk about coffee, you need to say the word ESPRESSO correctly! Ugh. ESS-presso.
adamshiftyelso (5 months ago)
Starbucks were basically everywhere in London leading up to the 2010 until nearly every store I can think of started closing down. I sure at least 50% of its stores it once had to be closed. Meanwhile in that same period Costa Coffee had been expanding aggressively both at home in the UK and abroad. The ‘08 crash and over-saturation I doubt had much to do with it, otherwise Costa would have suffered the same fate.
Doug Iden (5 months ago)
Mr. Schultz is the “Steve Jobs” of coffee. :-D
luan trieu (5 months ago)
Pay pennies for coffee bean and the farmers and sell the drinks for dollars on the pennies
Stella Maris (3 months ago)
https://en.wikipedia.org/wiki/Penny
Bailey Henderson (5 months ago)
Papa murphy's is expanding soon Starbucks and the other of public Washington State companies are winning I don't care it you are upset it's a fact I won this year so papa murphy's expands with sears kmart JCP and the whole alternative movement will crash
Lady of the Woods (5 months ago)
I go everyday I really like my SB coffee
Tanbone (5 months ago)
I think I’m addicted to Starbucks
oacy16 (5 months ago)
Narrator said “ekspresso” ...
drei t (5 months ago)
here in the philippines one mall can have 3 starbucks inside wtf
Merrielle Gatlin (5 months ago)
Nyc definitely has wayyy to many Starbucks
Merrielle Gatlin (5 months ago)
No matter where you go in the world at least you have the familiar taste of crappy coffee from starbucks
DJMinor5000 (6 months ago)
Starbucks is a member of the evil empire out to destroy the world, up there with Walmart, Apple, Disney, etc.
Danny Jenks (6 months ago)
no Starbucks in Perth Australia
PRYWATNY (6 months ago)
Just drinking in UK . Taste was awfull .
Stella Maris (3 months ago)
https://en.wikipedia.org/wiki/UK
Maria Jaramillo (6 months ago)
There customer service is amazing i called and told them about my bad experience they emailed me a 10$ gift card for my trouble! I had only paid 3.5 for the iced coffee
cisa93 (6 months ago)
💩 💩 ☕️
trebledc (6 months ago)
I only drink coffee at starbucks in airports. So i believe coffee is like cigarrete, if you tried smoking in one place everytime your are there you will be tempted to smoke. Its addiction.
Robert King (6 months ago)
Having never patronized a Starbucks, I simply don't get it. I've had their coffee and frankly, it is horrendous and overpriced. Starbucks is successful not for their coffee but for their name recognition. No-one, actually likes the taste of Starbucks coffees. They like the "status" it gives them as a Starbucks customer. Every darn movie that features a coffee shop, generally takes place in a Starbucks. This is why Starbucks is successful. Not quality, not speed, not even good service. Branding.
Atikah Rozali (6 months ago)
a sb coffee in my country costs RM13++ .. hell no.
Denny StylezZ (6 months ago)
Starbucks coffee tastes like crap. Dunkin Donuts coffee is wayyy better..
Breaking News Comics (6 months ago)
Ryans Bros is the best!
Elite Elite (6 months ago)
So many idiots still drink that garbage
the SUBMARINES (6 months ago)
High prices
Melissa H (6 months ago)
20,000sqf of "entrepreneurs" with laptops and no place to sit.
Andrew Maina (6 months ago)
That’s the wave of the future, traditional office space will be like how people used to use telephones tethered to a wall like sheep :).
Michael Slawson (6 months ago)
How Starbucks is loosing custumers,,,Their coffee sucks
Conner Jo (6 months ago)
Starbucks shouldn't open the store at the under-educated nation like CHINA.
Andrew (6 months ago)
3 words. Basic White Girls
Madeline Claire (6 months ago)
Ex-presso 😖😣😩
xr6lad (6 months ago)
Got to love CNBC. Starbucks rarely dominates any market outside the USA. It doesnt in most of Europe, certainly not Australia or New Zealand. In fact in Australia they had to shut many stores as you can get better made and roasted and cheaper coffee in pretty much every cafe in the country.
Gregg Hanson (6 months ago)
Let's get something straight here: The U.S. had become accustomed to crap coffee, with Folgers, etc. because those companies bought crap beans and ground or powered them. Starbucks brought good coffee to the U.S....what Europe and many places on earth had been using for many years. This doc implies that Starbucks just started charging more for coffee. Not the whole story.
J Man (6 months ago)
Did she really say “Expresso” God help her
Ni'Shara Thomas (6 months ago)
I literally pay for starbucks vias ONLY each pack sells for $10 for 16 packets of a specific coffee blend, or 4-6 for either a refresher or iced tea powder blend. I literally walk in a starbucks, ask for hot water or a hot water with a cup of ice or iced water only and i have my kit right there and i save on so much visits. You may get a few snarky looks here and there but $4-$8 for 1-2 drinks? No sorry its cheap cheap gang-gang over here lol.
Vincent Molyneux (6 months ago)
By not paying tax.
Andy M. (6 months ago)
i love Starbucks!
Metro Mmdk (6 months ago)
They cause too much problems with customers . no store policy. No one gets fired???? Each act as the snobish owners. They name you and judge you. Not clean.....
Metro Mmdk (6 months ago)
FAKE STAFF .MINIMUM WAGE.?????STEALING????
Metro Mmdk (6 months ago)
BARISTAS ARE THE BIGGEST AS HOLES ON THE PLANET. CHEESY
Avik Ghosh (6 months ago)
Fantastic story.
Fredrcg (6 months ago)
Starbucks customers start to get ripped off once Starbucks join Wall Street. From that point on it’s a matter of growing yearly sales and how are they doing that ? By raising prices. Nickel and dime every customer and prices will continue to go up.
juha bach (6 months ago)
4:33, Did I hear expresso and not espresso?
John Kimble (6 months ago)
You’re making a short documentary about coffee and the industry. And you say ekspresso
Donald Gray (6 months ago)
In 1944
Donald Gray (6 months ago)
In 1942 Vans PX started people loving coffee in Seattle. Starbucks is taking credit for something someone else did years before. They are overpriced, serve terrible coffee, and they don’t like conservatives or the Police!!
Shourjo Roychaudhuri (6 months ago)
In India we have around 140 stores.
meghna sankhla (6 months ago)
Wifi
Alli Eliz (6 months ago)
Their teas make me happy yes it’s over priced but you don’t get that at any fast food joint the variety is unbeatable. I’ll treat myself when i can
Dubwinner Heretoday (6 months ago)
Answer: Disney dollars
Surendran Selvaraj (7 months ago)
All your videos are good. It shows the sales growth. It would be great if you can add the net profit over the years which would show the exact growth.
WHITE LION (7 months ago)
When I saw the NY roastery was being built I knew it was terrible decision. Starbucks hasn't been doing too well in US compared to China. The first few weeks at the roastery I was in heaven and felt very VIP. They had well over 100 baristas on the floor watching customers like a hawk. I opened a tab just kept ordering and ordering I loved it. Baristas moved from all over the world to work at the roastery. Then I didn't go for a few months because it was so crowded so I didn't bother going in. Then I noticed the local fever died and it's now empty during the week and basically a tourist trap on weekends. It has sunk like the titanic. Corporate slashed baristas hours so most of the ones I knew from Day 1 are already gone. They no longer have that amazing VIP experience. You have to wait a long time on long lines and even longer time for your drink to be ready. It's just not worth the price anymore. I'd say if it's worth going once to check it out or as a date option but that's about it. Corporate has been so desperate to keep it afloat that they have sent over executives I guess while they try to figure out how to redesign the operation. Oh well... 🤷‍♂️🤷‍♂️🤷‍♂️🤷‍♂️🤷‍♂️🤷‍♂️🤷‍♂️🤷‍♂️