Starbucks stock: SBUX

Starbucks is the biggest American coffeehouse chain in the world. Its headquarters are in Seattle, Washington.

The multinational company sells coffee drinks, coffee beans, food, and beverages at its retail stores as well as wholesale to other outlets.

Starbucks: The Beginning

With a shared love for coffee, Jerry Baldwin (b. 1942), Gordon Bowker (b. 1942) and Zev Siegl (b. 1942) founded Starbucks in the 1970s. They invested and borrowed some money to open the first store in Seattle. The store was named “Starbucks” after the first mate, Starbucks, in Herman Melville’s novel Moby Dick. By the early 1980s, there were already four Starbucks stores in Seattle.

Starbucks’ new approach to coffee

Starbucks introduced a new approach to coffee. In 1971, when Starbucks opened their first ever store, most American coffee shops percolated low-grade coffee out of a can.  All this changed with Starbucks’ three founders. Their quality-driven approach shaped the public perception of what a cup of coffee could be.

In the beginning, they sold coffee beans roasted by coffee company Peet’s in Berkeley, California, before they began roasting their own.

Alfred Peet was an inspiration to the founders of Starbucks. Since the 1950s, Peet, who was a Dutch immigrant, had been importing fine arabica coffees in the US. In 1966, he established his store — Peet’s Coffee and Tea — in Berkeley, California. His success inspired the Starbucks founders who based their business model on Peet’s concept of selling high-quality coffee beans and equipment. After buying a roaster from Holland, Baldwin and Bowker began experimenting with Peet’s roasting techniques to create their own coffee blends.

For the first 10 years, Starbucks stores just sold beans. The first store to actually sell coffee opened in 1982. The same year Howard Schultz (b. 1953) was hired.

In 1984, opened its first espresso bar. In 1987, founding members Baldwin and Bowker (Siegl had sold his shares in 1980) sold Starbucks to a group of investors headed by Schultz.

Howard Schultz: The period of expansion

The well-known American businessman and billionaire Howard Schultz, who also owned the Seattle SuperSonics basketball team from 2001 to 2006, began working at Starbucks in 1982. He served as the CEO of Starbucks from 1986 to 2000, from 2008 to 2017, and as interim CEO since 2022.

But it was in 1981 when everything began. At the time, Schultz was a sales representative for Swedish Hammarplast from which Starbucks bought drip-coffee makers. After he noticed how large the company’s orders were, he decided to find out more about the company. In 1982, he got hired as the head of marketing.  In 1983, after attending an international housewares show in Milan and seeing the many Italian coffeehouses, he was inspired to do the same with Starbucks. The idea of the brand becoming a national coffeehouse chain didn’t appeal to Baldwin and Bowker who wanted to remain faithful to the traditional model of business.

Schultz left Starbucks in 1985 and opened a successful coffee chain, called Il Giornale. Once Baldwin and Bowker sold Starbucks in 1987, Schultz purchased the company with investor backing. He combined all his operations under the brand and expanded the business.

Starbucks stock: SBUX

The company went public in 1992. The initial public offering (IPO) was completed, and the common stock began trading on the NASDAQ National Market under the trading symbol SBUX. 

Starbucks goes global

In 1996, it began opening stores around the world, becoming the largest coffeehouse chain in the world. By the end of the 1990s, Starbucks had around 2,500 locations in more than a dozen countries. By 2007 the chain had more than 15,000 locations worldwide. In 2021, operating in dozens of countries with over 32,000 stores. In 2022, announced that Laxman Narasimhan would replace Schultz in 2023 as CEO.

2023: Starbucks to open 100 new stores in the UK

The company’s sales suffered during the pandemic, especially sales in its largest market, China. However, in 2022, the company started recovering and reported a big jump in sales in the UK. According to the latest news, Starbucks is planning to open 100 new stores across the UK and invest millions of pounds in improving existing cafes.

Despite inflation, which has increased costs for the firm and is affecting its profits, Starbucks’ expansion continues. The firm will also open 300 new stores in other European countries, the Middle East and Africa (EMEA). Duncan Moir, who heads the EMEA business, remained “cautious” about the economic outlook. The firm is facing various challenges such as shortages of HGV drivers, increasing supplier costs and shipping setbacks. Higher energy bills and staff demands higher wages are also a concern.

Since the pandemic, Starbucks said that customers’ habits had changed. This resulted in changes in the firm’s plans, which include an increase in drive-through branches and investment in digital capabilities in its stores.

Starbucks was considering selling its UK business last year, due to competition from other chains. It had also been hit hard by the pandemic restrictions.

Starbucks’ troubles

A US National Labour Relations Board (NLRB) judge has ruled that Starbucks illegally fired six workers in New York state. Michael A Rosas, a federal administrative law judge, accused the firm of “egregious and widespread” violations of federal labour law at its stores in the cities of Buffalo and Rochester.

Starbucks was ordered to rehire the workers and reimburse others who were affected. Rosas said Starbucks disregarded employees’ fundamental rights in response to union campaigns.

Starbucks told the BBC that their actions were lawful:  “We believe the decision and the remedies ordered are inappropriate given the record in this matter and are considering all options to obtain further legal review.”

The judge said that Starbucks interrogated and threatened workers and hampered the discussion of pay. It also sent high-ranking staff to stores to closely monitor employees and give the impression that employees’ union activities were under surveillance.

Last year and despite opposition from the firm, employees from 270 Starbucks stores across the US voted to join unions. Union campaigners have accused the company of violating labour laws. In response, the company has increased pay and made other changes.

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