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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 (694)
God (16 hours ago)
Doesn't matter how expensive it is if it's actually good
arturo j guzman (2 days 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 !
Cam The Sexy (9 days ago)
Costa Fans?
パンの耳ライオン (11 days ago)
Their coffee tastes like poo.. I'm good.. I'll go somewhere else.. ANYWHERE ELSE! Dennys has better coffee than this place
Jekku (14 days 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 (15 days 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 (19 days ago)
Mr. Schultz is the “Steve Jobs” of coffee. :-D
Joel W (22 days ago)
By convincing millions of hipster d-bags and various other trend followers that their utterly vile coffee (and toxic blah blah-chinos) tastes good and isn't 1000% overpriced. But hey, you get a fancy cup so everyone can know you are a mindless sheep (this applies to Apple as well)
luan trieu (22 days ago)
Pay pennies for coffee bean and the farmers and sell the drinks for dollars on the pennies
Bailey Henderson (26 days 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 (27 days ago)
I go everyday I really like my SB coffee
Tanbone (27 days ago)
I think I’m addicted to Starbucks
oacy16 (29 days ago)
Narrator said “ekspresso” ...
drei t (30 days ago)
here in the philippines one mall can have 3 starbucks inside wtf
Merrielle Gatlin (30 days ago)
Nyc definitely has wayyy to many Starbucks
Merrielle Gatlin (30 days ago)
No matter where you go in the world at least you have the familiar taste of crappy coffee from starbucks
DJMinor5000 (1 month ago)
Starbucks is a member of the evil empire out to destroy the world, up there with Walmart, Apple, Disney, etc.
Danny Jenks (1 month ago)
no Starbucks in Perth Australia
PRYWATNY (1 month ago)
Just drinking in UK . Taste was awfull .
Maria Jaramillo (1 month 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 (1 month ago)
💩 💩 ☕️
trebledc (1 month 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 (1 month 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 (1 month ago)
a sb coffee in my country costs RM13++ .. hell no.
Denny StylezZ (1 month ago)
Starbucks coffee tastes like crap. Dunkin Donuts coffee is wayyy better..
Jebbie Sans (1 month ago)
Ryans Bros is the best!
Elite Elite (1 month ago)
So many idiots still drink that garbage
the SUBMARINES (1 month ago)
High prices
Melissa Hudson (1 month ago)
20,000sqf of "entrepreneurs" with laptops and no place to sit.
Andrew Maina (1 month 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 (1 month ago)
How Starbucks is loosing custumers,,,Their coffee sucks
Conner Jo (1 month ago)
Starbucks shouldn't open the store at the under-educated nation like CHINA.
Andrew (1 month ago)
3 words. Basic White Girls
Maddie (1 month ago)
Ex-presso 😖😣😩
xr6lad (1 month 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 (1 month 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 (1 month ago)
Did she really say “Expresso” God help her
Ni'Shara Thomas (1 month 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 (1 month ago)
By not paying tax.
Andy M. (1 month ago)
i love Starbucks!
Metro Mmdk (1 month 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 (1 month ago)
Metro Mmdk (1 month ago)
Avik Ghosh (1 month ago)
Fantastic story.
Fredrcg (1 month 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 (1 month ago)
4:33, Did I hear expresso and not espresso?
John Kimble (1 month ago)
You’re making a short documentary about coffee and the industry. And you say ekspresso
Donald Gray (1 month ago)
In 1944
Donald Gray (1 month 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 (1 month ago)
In India we have around 140 stores.
meghna sankhla (1 month ago)
Next Generation Education & Farmers (1 month ago)
Awesome 😎
Alli Eliz (1 month 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 (2 months ago)
Answer: Disney dollars
Surendran Selvaraj (2 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 (2 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... 🤷‍♂️🤷‍♂️🤷‍♂️🤷‍♂️🤷‍♂️🤷‍♂️🤷‍♂️🤷‍♂️
Plant Maven (2 months ago)
Is she saying x-presso?
張海鷗 (2 months ago)
Tim Campbell (2 months ago)
If your doing a piece on coffee you should at least be able to say espresso correctly... There in no x
alex (2 months ago)
Starbucks coffee is crap 💩 according to my expert friends. Also overpriced!! If people use this shops for internet, stop drinking £5 coffees and I guarantee you can afford to pay for your own internet!!!!!
Ana Cristina Felizardo (2 months ago)
I much rather prefer my coffee... haven’t been in a Starbucks for years...
The Mazeシ (2 months ago)
Apple + Hauwei + Samsung *Laughs in Technology*
Tidwell (2 months ago)
I went to the Starbucks coffee farm in Costa Rica. It's was a great experience. But I have to say. Colombian coffee is better. Not sure if they have a farm in Columbia.
P Davison (2 months ago)
I make coffee at home and save/ invest $$$. Retiring well off at 60 y/o. I look at all these high fat/ sugary foo foo drinks and all the fat people drinkng them.....More than about 2 teaspoons worth of sugar a day is poison.
inviniti inviniti (2 months ago)
i am too smart to buy a cup of starbucks
prospecops (2 months ago)
Where my tim hortons fans at
LED Grow Lights Depot (2 months ago)
4:33 "Expresso"
QuietStormX (2 months ago)
I don't Drink Coffee or have I ever been in a Starbucks anywhere... Tea drinker here...
ᴅᴇᴀʀ ᴍʀ. ɪꜱᴀɪᴀʜ ᴅᴇʀɪɴɢᴇʀ; (2 months ago)
They -brewed- screwed it.
BILLIONS after YOUR MOTHER (2 months ago)
Vs Dutch
Fixer Upper (2 months ago)
Combine addictive substances like caffeine and sugar together, engage social media to make you think it's cool or something. Also charge way too much so any reasonable person that would blow your cover will never come around.
Cre8tive Cre8tion (2 months ago)
Am i really the only human that stays away fro Starbucks because of price? I mean how can some water + coffee bean drink cost so damn much?
Singa1song (21 days ago)
Cre8tive Cre8tion and their coffee tastes too bitter
Zakyrie (2 months ago)
Please lower the volume of music next time. It made it hard to hear the voiceovers... And thanks for the slick vid!
RawhideProductions1 (2 months ago)
sammi159 (2 months ago)
Starbucks is a huge success everywhere in the globe. It keeps expanding branches
Antione Berry (2 months ago)
simplified 1.$5 coffee🍵2.free WI-FI[i love it]3.make yourself look rich drinking it.
Mario castillo (2 months ago)
Too expensive for a cup of joe haven’t been there in years!!!!
Paul Štutas (2 months ago)
@4:33 Expresso?????
tallaussiebloke (2 months ago)
You might want to take the cup off Australia. The attempt to move in here was near totally laughed out, and most of the stores got bought out by Gloria Jean, who CAN make coffee.
Yang Yang (19 days ago)
Why do some people think that Starbucks can not make coffee? For me and my parents Starbucks and Tim Hortons are the only good and real coffee stores that I like. Although my parents prefer to make it at home now I still rely on Starbucks often they and Tim Hortons are the best to me.
Neville J. (2 months ago)
I work for Starbucks and after 3 hours into my shift we did a register check and it was slow and I sold over $600 worth of product imagine this times the crazy number of stores and if other stores were busier and you are making money
Benhard Sim (3 months ago)
Coffee with 40% ice.
Josh Saggers (3 months ago)
Americans are the only people who enjoy Starbucks as they are used to poor quality coffee. The rest of the world actually has good coffee so when Starbucks wants us to pay for overpriced poor quality coffee we laugh
Corbeutr (3 months ago)
4:30 you mean espresso
Dimitri Rodriguez (3 months ago)
By appealing to yuppies and rich folks
Vladimir Cmero (3 months ago)
Starbucks is selling overpriced coffee and hoping that I will pay that price because they will write my name on the cup.
Vicky Transparent LED Display Technology (3 months ago)
Love Starbucks
the eye in the sky (3 months ago)
And they pay nothing to the real farmers overseas for that cup of coffee
Angel Andres Garcia (3 months ago)
I really don't know what's the big deal about buying over priced coffee . I go to Walmart , buy a bag of Bustelo and make my own strong as hell
Yang Yang (19 days ago)
The thing many people like me for example can't stand black coffee and the coffee at Starbucks gives you more sweeten taste than if you were to make it on your own and add sugar to it.
Khandar William (3 months ago)
i'm more interested on how to sell overpriced beverages i also want high margin sales
SuperFabShop. com (3 months ago)
https://superfabshop.com/collections/beauty For all Your Shopping Needs
Ohioians Coasters (3 months ago)
It’s funny because the nearest Starbucks to me is 20 minutes away and I live near a city. There is a Starbucks opening a mile from me and I’m going to be happy
Elijah Ullmann (3 months ago)
!! eSpresso, not eXpresso !!
shinchan the best (3 months ago)
shinchan the best (3 months ago)
ok i am not creative with names so for now it works ;)
Shreyan Sharma (3 months ago)
shinchan the best I would like your comment but your username is terrible Btw I’m Indian as well
Mike Miller (3 months ago)
They can thank me... Been going since 1994. Every single day almost. In my 20s and 30s I went 3 times a day. I could have bought a house from all of the Starbucks I have consumed...
carmel bugeja (3 months ago)
unless they sell my favourite yeast rings that i like to have with my coffee, i won't step on their threshold
Reckless& Relentless (3 months ago)
Makes me want coffee.
nicolas romero nc r (3 months ago)
Muy sensillo es grasias a el esfuerso de toda la pobre gente que se pasa cultivando cafe a su sudor a la explotacion ...y a la gente tonta q sabe o se hacen tontos tambien q piensan que por tomarse un cafe de esa marca ya son muy finos jajajajajaja de ahi de la pobre gente es la fortuna de explotadores de star bucks ..
m k (3 months ago)
Starbucks is way too expensive, here in Ireland at least. €4 or so for a bloody coffee.
radcow (3 months ago)
57% wow Americans people are just blame bad with there money
Se7ens (3 months ago)
beta females, that's why.
Doğukan Tunçer (3 months ago)
drtuki (3 months ago)