Starbucks

This article is about the coffeehouse chain. For other uses, see Starbuck.
Starbucks Corporation
Public
Traded as
Industry Coffee shop
Founded March 31, 1971 (1971-03-31)
Pike Place Market, Elliott Bay, Seattle, Washington, U.S.
Founder
Headquarters 2401 Utah Avenue South, Seattle, Washington, U.S.
Number of locations
 24,464[1] (2016)
Area served
 Worldwide
Key people
Products
  • Coffee beverages
  • smoothies
  • tea
  • baked goods
  • sandwiches
Revenue Increase US$19.16 billion (2015)
Increase US$3.6 billion[2] (2015)
Increase US$2.76 billion (2015)
Total assets Increase US$12.45 billion[2] (2015)
Total equity Increase US$5.82 billion[2] (2015)
Number of employees
 238,000[3] (2016)
Subsidiaries
Website www.starbucks.com

Starbucks Corporation is an American coffee company and coffeehouse chain. Starbucks was founded in Seattle, Washington in 1971. As of November 2016 it operates 23,768 locations worldwide, including 13,107 (+170) in the United States, 2,204 (+86) in China, 1,418 (-12) in Canada, 1,160 (+2) in Japan and 872 in South Korea (bumping United Kingdom from 5th place) (Differences reflect growth since Jan 8, 2016).[1][4]

Starbucks is considered the main representative of "second wave coffee", initially distinguishing itself from other coffee-serving venues in the US by taste, quality, and customer experience, while popularizing darkly roasted coffee.[5] Since the 2000s, third wave coffee makers have targeted quality-minded coffee drinkers with hand-made coffee based on lighter roasts, while Starbucks nowadays uses automated espresso machines for efficiency and safety reasons.[5][6]

Starbucks locations serve hot and cold drinks, whole-bean coffee, microground instant coffee known as VIA, espresso, caffe latte, full- and loose-leaf teas including Teavana tea products,[7] Evolution Fresh juices, Frappuccino beverages, La Boulange pastries, and snacks including items such as chips and crackers; some offerings (including their annual fall launch of the Pumpkin Spice Latte) are seasonal or specific to the locality of the store. Many stores sell pre-packaged food items, hot and cold sandwiches, and drinkware including mugs and tumblers; select "Starbucks Evenings" locations offer beer, wine, and appetizers.[8] Starbucks-brand coffee, ice cream and bottled cold coffee drinks are also sold at grocery stores.

Starbucks first became profitable in Seattle in the early 1980s,[9] and despite an initial economic downturn with its expansion into the Midwest and British Columbia in the late 1980s,[10] the company experienced revitalized prosperity with its entry into California in the early 1990s.[11] The first Starbucks location outside North America opened in Tokyo in 1996; overseas properties now constitute almost one third of its stores.[12] The company had opened an average of two new locations daily between 1987 and 2007.[13]

On December 1, 2016, Howard Schultz announced he would resign as CEO effective in April 2017 and will be replaced by Kevin Johnson.

History

Interior of the Pike Place Market location in 1977

Founding

The first Starbucks opened in Seattle, Washington, on March 31, 1971,[14] by three partners who met while they were students at the University of San Francisco:[15] English teacher Jerry Baldwin, history teacher Zev Siegl, and writer Gordon Bowker. The three were inspired to sell high-quality coffee beans and equipment by coffee roasting entrepreneur Alfred Peet after he taught them his style of roasting beans.[16] The company took the name of the chief mate in the book Moby-Dick: Starbuck, after considering "Cargo House" and "Pequod".[17] Bowker recalls that Terry Heckler, with whom Bowker owned an advertising agency, thought words beginning with "st" were powerful. The founders brainstormed a list of words beginning with "st". Someone pulled out an old mining map of the Cascade Range and saw a mining town named "Starbo", which immediately put Bowker in mind of the character "Starbuck". Bowker said, "Moby-Dick didn't have anything to do with Starbucks directly; it was only coincidental that the sound seemed to make sense."[18]

The Starbucks store at 1912 Pike Place. This is the second location of the original Starbucks, which was at 2000 Western Avenue from 1971 to 1976.

The first Starbucks store was located in Seattle at 2000 Western Avenue from 1971–1976. This cafe was later moved to 1912 Pike Place; never to be relocated again.[19] During this time, the company only sold roasted whole coffee beans and did not yet brew coffee to sell.[20] The only brewed coffee served in the store were free samples. During their first year of operation, they purchased green coffee beans from Peet's, then began buying directly from growers.

Sale and expansion

In 1984, the original owners of Starbucks, led by Jerry Baldwin, purchased Peet's.[21] During the 1980s, total sales of coffee in the US were falling, but sales of specialty coffee increased, forming 10% of the market in 1989, compared with 3% in 1983.[22] By 1986 the company operated six stores in Seattle[22] and had only just begun to sell espresso coffee.[23]

In 1987, the original owners sold the Starbucks chain to former manager[24] Howard Schultz, who rebranded his Il Giornale coffee outlets as Starbucks and quickly began to expand. In the same year, Starbucks opened its first locations outside Seattle at Waterfront Station in Vancouver, British Columbia, and Chicago, Illinois.[25] By 1989, 46 stores existed across the Northwest and Midwest and annually, Starbucks was roasting over 2,000,000 pounds (907,185 kg) of coffee.[22]

At the time of its initial public offering (IPO) on the stock market in June 1992, Starbucks had 140 outlets, with a revenue of US$73.5 million, up from US$1.3 million in 1987. The company's market value was US$271 million by this time. The 12% portion of the company that was sold raised around US$25 million for the company, which facilitated a doubling of the number of stores over the next two years.[26] By September 1992, Starbucks' share price had risen by 70% to over 100 times the earnings per share of the previous year.[20]

In July 2013, over 10% of in-store purchases were made on customer's mobile devices using the Starbucks app.[27] The company once again utilized the mobile platform when it launched the "Tweet-a-Coffee" promotion in October 2013. On this occasion, the promotion also involved Twitter and customers were able to purchase a US$5 gift card for a friend by entering both "@tweetacoffee" and the friend's handle in a tweet. Research firm Keyhole monitored the progress of the campaign and a December 6, 2013 media article reported that the firm had found that 27,000 people had participated and US$180,000 of purchases were made to date.[28][29]

Expansion to new markets and products

The first Starbucks location outside North America opened in Tokyo, Japan, in 1996.[30] Starbucks entered the U.K. market in 1998 with the $83 million[31] USD acquisition of the then 56-outlet, UK-based Seattle Coffee Company, re-branding all the stores as Starbucks. In September 2002, Starbucks opened its first store in Latin America, at Mexico City. Currently there are over 500 locations in Mexico and there are plans for the opening of up to 850 by 2018.[32]

In 1999, Starbucks experimented with eateries in the San Francisco Bay area through a restaurant chain called Circadia.[33] These restaurants were soon "outed" as Starbucks establishments and converted to Starbucks cafes.

In October 2002, Starbucks established a coffee trading company in Lausanne, Switzerland to handle purchases of green coffee. All other coffee-related business continued to be managed from Seattle.[34]

In April 2003, Starbucks completed the purchase of Seattle's Best Coffee and Torrefazione Italia from AFC Enterprises for $72m. The deal only gained 150 stores for Starbucks, but according to the Seattle Post-Intelligencer the wholesale business was more significant.[35] In September 2006, rival Diedrich Coffee announced that it would sell most of its company-owned retail stores to Starbucks. This sale included the company-owned locations of the Oregon-based Coffee People chain. Starbucks converted the Diedrich Coffee and Coffee People locations to Starbucks, although the Portland International Airport Coffee People locations were excluded from the sale.[36]

In August 2003, Starbucks opened its first store in South America in Lima, Peru.[37]

In 2007, the company opened its first store in Russia, ten years after first registering a trademark there.[38]

In March 2008 they purchased the manufacturer of the Clover Brewing System. They began testing the "fresh-pressed" coffee system at several Starbucks locations in Seattle, California, New York and Boston.[39]

Graph showing the growth in the number of Starbucks stores between 1971 and 2011[25]

In early 2008, Starbucks started a community website, My Starbucks Idea, designed to collect suggestions and feedback from customers. Other users comment and vote on suggestions. Journalist Jack Schofield noted that "My Starbucks seems to be all sweetness and light at the moment, which I don't think is possible without quite a lot of censorship". The website is powered by Salesforce.com software.[40]

In May 2008, a loyalty program was introduced for registered users of the Starbucks Card (previously simply a gift card) offering perks such as free Wi-Fi Internet access, no charge for soy milk and flavored syrups, and free refills on brewed drip coffee, iced coffee or tea.[41] In 2009, Starbucks began beta testing its mobile app for the Starbucks card, a stored value system in which consumers access pre-paid funds to purchase products at Starbucks.[42] Starbucks released its complete mobile platform on January 11, 2011.

On November 14, 2012, Starbucks announced the purchase of Teavana for US$620 million in cash[43] and the deal was formally closed on December 31, 2012.[44]

On February 1, 2013, Starbucks opened its first store in Ho Chi Minh City, Vietnam,[45][46][47] and this was followed by an announcement in late August 2013 that the retailer will be opening its inaugural store in Colombia. The Colombian announcement was delivered at a press conference in Bogota, where the company's CEO explained, "Starbucks has always admired and respected Colombia's distinguished coffee tradition."[48]

In August 2014, Starbucks opened their first store in Williamsburg, Brooklyn. This location will be one of 30 Starbucks stores that will serve beer and wine.[49]

In September 2014, it was revealed that Starbucks would acquire the remaining 60.5 percent stake in Starbuck Coffee Japan that it does not already own, at a price of $913.5 million.[50]

In August 2015, Starbucks announced that it will enter Cambodia, its 16th market in the China/Asia Pacific region. The first location will open in the capital city of Phnom Penh by the end of 2015.[51]

In February 2016, Starbucks announced that it will enter Italy, its 24th market in Europe. The first location will open in Milan by 2017.[52] In August, startup company FluxPort introduced Qi inductive charging pads at select locations in Germany.[53]

In September 2016, Starbucks announced a debut of its first-ever original content series called "Upstanders" which aims to inspire Americans with stories of compassion, citizenship and civility. The series features podcasts, written word, and video, and will be distributed via the Starbucks mobile app, online, and through the company's in-store digital network.[54]

Corporate governance

Howard Schultz, CEO of Starbucks

Starbucks' chairman, Howard Schultz, has talked about making sure growth does not dilute the company's culture[55]

Howard Schultz served as the company's CEO until 2000.[56] Orin C. Smith was President and CEO of Starbucks from 2001 to 2005.

In January 2008, Schultz resumed his roles as President and CEO after an eight-year hiatus, replacing Jim Donald, who took the posts in 2005 but was asked to step down after sales slowed in 2007. Schultz aims to restore what he calls the "distinctive Starbucks experience" in the face of rapid expansion. Analysts believe that Schultz must determine how to contend with higher materials prices and enhanced competition from lower-price fast food chains, including McDonald's and Dunkin' Donuts. Starbucks announced it would discontinue the warm breakfast sandwich products they originally intended to launch nationwide in 2008 and refocus on coffee, but they reformulated the sandwiches to deal with complaints and kept the product line.[57]

As of January 2015, the chief operating officer of Starbucks was Troy Alstead, though at that time he announced he was taking an extended leave of absence of undetermined length.[56] Subsequently, Kevin Johnson was appointed to succeed Alstead as president and COO.[58]

In October 2015, Starbucks hired its first Chief Technology Officer, Gerri Martin-Flickinger, to lead their technology team.[59]

Starbucks maintains control of production processes by communicating with farmers to secure beans, roasting its own beans, and managing distribution to all retail locations. Additionally, Starbucks’ Coffee and Farmer Equity Practices require suppliers to inform Starbucks what portion of wholesale prices paid reaches farmers.[60][61]

Products

A typical sales area, this one in Peterborough, UK, showing a display of food and the beverage preparation area

In 1994, Starbucks bought The Coffee Connection, gaining the rights to use, make, market, and sell the "Frappuccino" beverage.[62] The beverage was introduced under the Starbucks name in 1995 and as of 2012, Starbucks had annual Frappuccinos sales of over $2 billion.[62]

The company began a "skinny" line of drinks in 2008, offering lower-calorie and sugar-free versions of the company's offered drinks that use skim milk, and can be sweetened by a choice of "natural" sweeteners (such as raw sugar, agave syrup, or honey), artificial sweeteners (such as Sweet'N Low, Splenda, Equal), or one of the company's sugar-free syrup flavors.[63][64] Starbucks stopped using milk originating from rBGH-treated cows in 2007.[65]

In June 2009, the company announced that it would be overhauling its menu and selling salads and baked goods without high-fructose corn syrup or artificial ingredients.[66] This move was expected to attract health- and cost-conscious consumers and will not affect prices.[66]

Starbucks introduced a new line of instant coffee packets, called VIA "Ready Brew", in March 2009. It was first unveiled in New York City with subsequent testing of the product also in Seattle, Chicago and London. The first two VIA flavors include Italian Roast and Colombia, which were then rolled out in October 2009, across the U.S. and Canada with Starbucks stores promoting the product with a blind "taste challenge" of the instant versus fresh roast, in which many people could not tell the difference between the instant and fresh brewed coffee. Analysts speculated that by introducing instant coffee, Starbucks would devalue its own brand.[67]

Starbucks began selling beer and wine at some US stores in 2010. As of April 2012, it is available at seven locations and others have applied for licenses.[68]

In 2011, Starbucks introduced its largest cup size, the Trenta, which can hold 31 ounces.[69] In September 2012, Starbucks announced the Verismo, a consumer-grade single-serve coffee machine that uses sealed plastic cups of coffee grounds, and a "milk pod" for lattes.[70]

On November 10, 2011, Starbucks Corporation announced that it had bought juice company Evolution Fresh for $30 million in cash and planned to start a chain of juice bars starting in around middle of 2012, venturing into territory staked out by Jamba Inc. Its first store released in San Bernardino, California and plans for a store in San Francisco were to be launched in early 2013.[71]

In 2012, Starbucks began selling a line of iced Starbucks Refresher beverages that contain an extract from green arabica coffee beans. The beverages are fruit flavored and contain caffeine but advertised as having no coffee flavor. Starbucks' green coffee extraction process involves soaking the beans in water.[72]

On June 25, 2013, Starbucks began to post calorie counts on menus for drinks and pastries in all of their U.S. stores.[73]

In 2014, Starbucks began producing their own line of "handcrafted" sodas, dubbed "Fizzio".[74]

In 2015, Starbucks began serving coconut milk as an alternative to dairy and soy.[75]

Name Measurement Notes
Demi 3 US fl oz (89 ml) Smallest size. Espresso shots.
Short 8 US fl oz (240 ml) Smaller of the two original sizes
Mini[76] 10 US fl oz (300 ml) Smaller than the three original Frappuccino sizes, offered as lower-calorie option
Tall 12 US fl oz (350 ml) Larger of the two original sizes
Grande 16 US fl oz (470 ml) Italian for "large"
Venti 20 US fl oz (590 ml)
24 US fl oz (710 mL)		 Italian for "twenty"
Trenta 31 US fl oz (920 ml) Italian for "thirty"

Tea

Starbucks entered the tea business in 1999 when it acquired the Tazo brand for US$8,100,000.[77][78] In late 2012, Starbucks paid US$620 million to buy Teavana.[44][79] As of November 2012, there is no intention of marketing Starbucks' products in Teavana stores, though the acquisition will allow the expansion of Teavana beyond its current main footprint in shopping malls.[78] In January 2015, Starbucks began to roll out Teavana teas into Starbucks stores, both in to-go beverage and retail formats.[80]

Coffee quality

Kevin Knox, who was in charge of doughnuts quality at Starbucks from 1987 to 1993, recalled on his blog in 2010 how George Howell, coffee veteran and founder of the Cup of Excellence, had been appalled at the dark roasted beans that Starbucks was selling in 1990.[39][81] Talking to the New York Times in 2008, Howell stated his opinion that the dark roast used by Starbucks does not deepen the flavor of coffee, but instead can destroy purported nuances of flavor.[39] The March 2007 issue of Consumer Reports compared American fast-food chain coffees and ranked Starbucks behind McDonald's Premium Roast. The magazine called Starbucks coffee "strong, but burnt and bitter enough to make your eyes water instead of open".[82] As reported by TIME in 2010, third wave coffee proponents generally criticize Starbucks for over-roasting beans.[83]

Although pour over coffee options are available at every Starbucks location, the company generally does not advertise them conspicuously, because preparation times are much higher and thus profits are lower than for espresso-based variations.[5]

Other products

In 2012, Starbucks introduced Starbucks Verismo, a line of coffee makers that brew espresso and regular chocolate from coffee capsules, a type of pre-apportioned single-use container of ground coffee and flavorings utilizing the K-Fee pod system.[84] In a brief review of the 580 model, Consumer Reports described the results of a comparative test of the Verismo 580 against two competitive brands: "Because you have to conduct a rinse cycle between each cup, the Verismo wasn't among the most convenient of single-serve machines in our coffeemaker tests. Other machines we've tested have more flexibility in adjusting brew strength—the Verismo has buttons for coffee, espresso, and latte with no strength variation for any type. And since Starbucks has limited its coffee selection to its own brand, there are only eight varieties so far plus a milk pod for the latte."[85]

Locations

The company's headquarters is located in Seattle, Washington, United States, where 3,501 people worked as of January 2015.[86]

Current

As of June 9, 2016, Starbucks is present in 72 countries and territories.[1][4]

Africa North America Oceania South America Asia Europe

Licensed locations

Independently operated Starbucks locations exist. Stores that independently operate locations include Ahold Delhaize, Barnes & Noble, Target, Tom Thumb stores. As of 2015, 4,962 licensed locations exist.[91]

Store count

[92]

Africa
North America
Oceania
South America
Asia
Europe

In 2008, Starbucks continued its expansion, settling in Argentina, Belgium, Brazil, Bulgaria, the Czech Republic and Portugal.[25]

European and Scandinavian expansion continued in 2009 with Poland (April),[93] Utrecht, Netherlands (August), and Sweden at Arlanda airport outside Stockholm (October).[94]

In 2010, growth in new markets continued. In May 2010, Southern Sun Hotels South Africa announced that they had signed an agreement with Starbucks to brew Starbucks coffees in select Southern Sun and Tsonga Sun hotels in South Africa. The agreement was partially reached so Starbucks coffees could be served in the country in time for the 2010 FIFA World Cup hosted by South Africa.[95] In June 2010, Starbucks opened its first store in Budapest, Hungary and in November the company opened the first Central American store in El Salvador's capital, San Salvador.[96]

In December 2010, Starbucks debuted their first ever Starbucks at sea, where with a partnership with Royal Caribbean International; Starbucks opened a shop aboard their Allure of the Seas Royal Caribbean's second largest ship, and also the second largest ship in the world.[97]

Starbucks is planning to open its fourth African location, after South Africa, Egypt and Morocco, in Algeria. A partnership with Algerian food company Cevital will see Starbucks open its first Algerian store in Algiers.[98]

Starbucks at Delhi airport.

In January 2011, Starbucks and Tata Coffee, Asia's largest coffee plantation company, announced plans for a strategic alliance to bring Starbucks to India and also to source and roast coffee beans at Tata Coffee's Kodagu facility.[99] Despite a false start in 2007,[100] in January 2012, Starbucks announced a 50:50 joint venture with Tata Global Beverages called Tata Starbucks. Tata Starbucks will own and operate Starbucks outlets in India as Starbucks Coffee "A Tata Alliance".[101] Starbucks opened its first store in India in Mumbai on October 19, 2012.[102][103][104]

Starbucks at the Forbidden City, Beijing, China

In February 2011, Starbucks started selling their coffee in Norway by supplying Norwegian food shops with their roasts. The first Starbucks-branded Norwegian shop opened on February 8, 2012 at Oslo lufthavn, Gardermoen. In October 2011, Starbucks opened another location in Beijing, China, at the Beijing Capital International Airport's Terminal 3, international departures hall; making the company's 500th store in China. The store is the 7th location at the airport. The company planned to expand to 1,500 stores in China by 2015.[105] In May 2012, Starbucks opened its first coffeehouse in Finland, with the location being Helsinki-Vantaa airport in Vantaa.[106] Starbucks recently opened a store in San Jose Costa Rica, in 2 popular locations. 1 opened in a mall and the other in Avenida Escazu.

In October 2012, Starbucks announced plans to open 1,000 stores in the United States in the next five years.[107] The same month, the largest Starbucks in the US opened at the University of Alabama's Ferguson Center.[108]

In 2013, Starbucks met with Danish Supermarket, which is the biggest retail company in Denmark. The first Starbucks inside Danish Supermarket opened in August 2013 in the department stores Salling in Aalborg and Aarhus.[109]

Starbucks has announced its first café in Bolivia would open in 2014 in Santa Cruz de la Sierra, and the first in Panama in 2015.[110]

On June 19, 2015, a Starbucks opened at Disney's Animal Kingdom on Discovery Island. Since the park does not allow plastic straws due to the animals, this location features special green eco-friendly straws with their cold drinks.[111] This was the sixth Starbucks to open in Walt Disney World, following locations in the Magic Kingdom (Main Street, U.S.A.), Epcot (Future World), Disney's Hollywood Studios (Hollywood Boulevard),[112] and two in Disney Springs (Marketplace and West Side). In addition to these six, there are locations in Disneyland (Main Street, U.S.A.), Disney California Adventure (Buena Vista Street), Anaheim's Downtown Disney, and Disney Village at Disneyland Paris. The Downtown Disney and Disney Springs locations are Starbucks-operated, while the locations inside of the theme parks are Disney-operated.[113]

Starbucks in Mexico City

Bill Sleeth, Starbuck's vice president of global design, has overseen efforts to make a neighborhood feel for new stores, saying "What you don’t want is a customer walking into a store in downtown Seattle, walking into a store in the suburbs of Seattle and then going into a store in San Jose, and seeing the same store." Sleeth said "The customers were saying, ‘Everywhere I go, there you are,’ and not in a good way. We were pretty ubiquitous." As part of a change in compact direction, Starbucks management wanted to transition from the singular brand worldwide to focusing on locally relevant design for each store. [114]

Starbuck's first Channel Island store was to open in early 2015, in the primary business area of St Peter Port in Guernsey.[115]

On September 10, Starbucks opened its first franchise in Azerbaijan, in the Port Baku Mall.

In August 2013, Starbucks' CEO, Howard Schultz, personally announced the opening of Starbucks stores in Colombia. The first café was set to open in 2014 in Bogotá, and add 50 more stores throughout Colombia's main cities in a 5 year limit. Schultz also stated that Starbucks will work with both the Colombian Government and USAID to continue "empowering local coffee growers and sharing the value, heritage and tradition of its coffee with the world." Starbucks noted that the aggressive expansion into Colombia was a joint venture with Starbucks' Latin partners, Alsea and Colombia's Grupo Nutresa that has previously worked with Starbucks by providing coffee through Colcafe. This announcement comes after Starbucks' Farmer Support Center was established in Manizales, Colombia the previous year making Colombia an already established country by the corporation.[116]

Starbucks in Lomas de Zamora, Argentina

On December 18, 2015, Starbucks opened in Almaty, Kazakhstan. On the next day, 1 more coffeeshop was opened.[117]

The first Starbucks store in Slovakia opened in Aupark Shopping Center in Bratislava on May 31, 2016,[118][119] with two more stores confirmed to open in Bratislava by the end of 2016.

In February 2016, Howard Schultz announced the opening of stores in Italy. The first Italian Starbucks store will open in Milan in 2017.[120]

Starbucks opens its first store in South Africa in Rosebank, Johannesburg on Thursday April 21, 2016 and its second in the country towards the end of April in Mall of Africa.

Former

In 2003, after struggling with fierce local competition, Starbucks closed all six of its locations in Israel, citing "on-going operational challenges" and a "difficult business environment."[121][122]

The Starbucks location in the former imperial palace in Beijing closed in July 2007. The coffee shop had been a source of ongoing controversy since its opening in 2000 with protesters objecting that the presence of the American chain in this location "was trampling on Chinese culture."[123][124]

In July 2008, the company announced it was closing 600 under-performing company-owned stores and cutting U.S. expansion plans amid growing economic uncertainty.[125][126] On July 29, 2008, Starbucks also cut almost 1,000 non-retail jobs as part of its bid to re-energize the brand and boost its profit. Of the new cuts, 550 of the positions were layoffs and the rest were unfilled jobs.[127] These closings and layoffs effectively ended the company's period of growth and expansion that began in the mid-1990s.

Starbucks also announced in July 2008 that it would close 61 of its 84 stores in Australia in the following month.[128] Nick Wailes, an expert in strategic management of the University of Sydney, commented that "Starbucks failed to truly understand Australia's cafe culture."[129] In May 2014 Starbucks announced ongoing losses in the Australian market, which resulted in the remaining stores being sold to the Withers Group.[130]

In January 2009, Starbucks announced the closure of an additional 300 under-performing stores and the elimination of 7,000 positions. CEO Howard Schultz also announced that he had received board approval to reduce his salary.[131] Altogether, from February 2008 to January 2009, Starbucks terminated an estimated 18,400 U.S. jobs and began closing 977 stores worldwide.[132]

In August 2009, Ahold announced closures and rebranding for 43 of their licensed store Starbucks kiosks for their US based Stop & Shop and Giant supermarkets. However, Ahold has not yet abandoned the licensed Starbucks concept; they planned to open 5 new licensed stores by the end of 2009.[133][134]

In July 2012, the company announced that they may begin closing unprofitable European stores immediately.[135]

Unbranded stores

Main article: Stealth Starbucks

In 2009, at least three stores in Seattle were de-branded to remove the logo and brand name, and remodel the stores as local coffee houses "inspired by Starbucks."[136][137] CEO Howard Schultz says the unbranded stores are a "laboratory for Starbucks".[138] The first, 15th Avenue Coffee and Tea, opened in July 2009 on Capitol Hill. It served wine and beer, and hosted live music and poetry readings.[139] It has since been remodeled and reopened as a Starbucks-branded store. Another is Roy Street Coffee and Tea at 700 Broadway E., also on Capitol Hill. Although the stores have been called "stealth Starbucks"[136][140] and criticized as "local-washing",[141] Schultz says that "It wasn't so much that we were trying to hide the brand, but trying to do things in those stores that we did not feel were appropriate for Starbucks."[138]

Automated locations

Starbucks has automated systems in some areas. These machines have 280 possible drink combinations to choose from. They have touchscreens and customers can play games while they wait for their order.[142]

Facilities

Starbucks in Dortmund, Germany
Starbucks in İzmir, Turkey

Free Wi-Fi Internet access varies in different regions. In Germany customers get unlimited free Wi-Fi through BT Openzone, and in Switzerland and Austria customers can get 30 minutes with a voucher card (through T-Mobile).

Since 2003, Starbucks in the UK rolled out a paid Wi-Fi based on one-time, hourly or daily payment. Then, in September 2009, it was changed to a 100% free Wi-Fi at most of its outlets. Customers with a Starbucks Card are able to log-on to the Wi-Fi in-store for free with their card details, thereby bringing the benefits of the loyalty program in-line with the United States.[143] Beginning in July 2010, Starbucks offers free Wi-Fi in all of its US stores via AT&T and information through a partnership with Yahoo!. This is an effort to be more competitive against local chains, which have long offered free Wi-Fi, and against McDonald's, which began offering free wireless internet access in 2010.[144] On June 30, 2010, Starbucks announced it would begin to offer unlimited and free Internet access via Wi-Fi to customers in all company-owned locations across Canada starting on July 1, 2010.[145]

In October 2012, Starbucks and Duracell Powermat announced a pilot program to install Powermat charging surfaces in the tabletops in selected Starbucks stores in the Boston area.[146] Further more, Starbucks announced its support in the Power Matters Alliance (PMA) and its membership in the PMA board, along with Google and AT&T, in an effort to create "a real-world ecosystem of wireless power" through a universal wireless charging standard that customers could use to recharge smart phones.[147]

Starbucks launched a new Mobile Order & Pay app in Portland, Oregon on December 2015.[148] This includes a bar code in mobile. This bar code needs to be scanned by a small scanner at the counter. Customers can pay from their smart phone by just waving their phone off the scanner. In one quarter 16% of transactions were made through this mobile app.

Advertising

Logo

1971–87
1992–2011
2011–present

In 2006, Valerie O'Neil, a Starbucks spokeswoman, said that the logo is an image of a "twin-tailed mermaid, or siren as she's known in Greek mythology".[149] The logo has been significantly streamlined over the years. In the first version,[150] the Starbucks siren was topless and had a fully visible double fish tail.[151] The image also had a rough visual texture and has been likened to a melusine.[152] The image is said by Starbucks to be based on a 16th-century "Norse" woodcut, although other scholars note that it is apparently based on a 15th-century woodcut in J.E. Cirlot's Dictionary of Symbols.[153][154]

In the second version, which was used from 1987–92, her breasts were covered by her flowing hair, but her navel was still visible.[155] The fish tail was cropped slightly, and the primary color was changed from brown to green, a nod to the Alma Mater of the three founders, the University of San Francisco.[156][157] In the third version, used between 1992 and 2011, her navel and breasts are not visible at all, and only vestiges remain of the fish tails. The original "woodcut" logo has been moved to the Starbucks' Headquarters in Seattle.

At the beginning of September 2006 and then again in early 2008, Starbucks temporarily reintroduced its original brown logo on paper hot-drink 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. The vintage logo sparked some controversy due in part to the siren's bare breasts,[158] but the temporary switch garnered little attention from the media. Starbucks had drawn similar criticism when they reintroduced the vintage logo in 2006.[159] The logo was altered when Starbucks entered the Saudi Arabian market in 2000 to remove the siren, leaving only her crown,[160] as reported in a Pulitzer Prize-winning column by Colbert I. King in The Washington Post in 2002. The company announced three months later that it would be using the international logo in Saudi Arabia.[161]

In January 2011, Starbucks announced that they would make small changes to the company's logo, removing the Starbucks wordmark around the siren, enlarging the siren image, and making it green.[162]

Partnerships

Starbucks has agreed to a partnership with Apple to collaborate on selling music as part of the "coffeehouse experience". In October 2006, Apple added a Starbucks Entertainment area to the iTunes Store, selling music similar to that played in Starbucks stores. In September 2007 Apple announced that customers would be able to browse the iTunes Store at Starbucks via Wi-Fi in the US—with no requirement to log in to the Wi-Fi network—targeted at iPhone, iPod touch, iPad, and MacBook users. The iTunes Store will automatically detect recent songs playing in a Starbucks and offer users the opportunity to download the tracks. Some stores feature LCD screens with the artist name, song, and album information of the current song playing. This feature has been rolled out in Seattle, New York City, and the San Francisco Bay Area, and was offered in limited markets during 2007–2008.[163] During the fall of 2007, Starbucks also began to sell digital downloads of certain albums through iTunes. Starbucks gave away 37 different songs for free download through iTunes as part of the "Song of the Day" promotion in 2007, and a "Pick of the Week" card is now available at Starbucks for a free song download. Since 2011 Starbucks also gives away a "Pick of the Week" card for app downloads from the App Store. A Starbucks app is available in the iPhone App Store.

Starting on June 1, 2009, the MSNBC morning news program Morning Joe has been presented as "brewed by Starbucks" and the show's logo changed to include the company logo. Although the hosts have previously consumed Starbucks coffee on air "for free" in the words of MSNBC president Phil Griffin, it was not paid placement at that time.[164] The move was met with mixed reactions from rival news organizations, viewed as both a clever partnership in an economic downturn and a compromise of journalistic standards.[165]

Starbucks and Kraft Foods entered into a partnership in 1998 to sell Starbucks products in the Mondelez grocery stores owned by the latter. Starbucks claimed that Kraft did not sufficiently promote its products and offered Kraft US$750 million to terminate the agreement; however, Kraft declined the offer, but Starbucks proceeded with the termination anyway. Starbucks wanted to terminate the agreement because at the time, single coffee packs were beginning to become popular. In their agreement, Starbucks was confined to selling packs that only worked in Kraft's Tassimo machines. Starbucks didn't want to fall behind in the market opportunities for k cups.[166] In mid-November 2013, an arbitrator ordered Starbucks to pay a fine of US$2.8 billion to Kraft spin-off Mondelez International for its premature unilateral termination of the agreement.[167][168][169]

In June 2014, Starbucks announced a new partnership with Arizona State University (ASU) that would allow Starbucks employees in their Junior and Senior years of college to complete four years of college at Arizona State University's online program for only around 23K. Starbucks employees admitted into the program will receive a scholarship from the college, College Achievement Plan (CAP), that will cover 44% of their tuition. The remaining balance and all other expenses would be paid by the student or through traditional financial aid. In April 2015, Starbucks and ASU announced an expansion of the College Achievement Program. The program would now allow all eligible part-time and full-time employees working in a U.S. Starbucks to enroll in the program for full-tuition reimbursement.[170] After the completion of each semester Starbucks reimburses the student their portion of the tuition. The student can then use the reimbursement to pay any loans or debt incurred during the semester.[171]

In 2015 Starbucks signed a deal with PepsiCo to market and distribute Starbucks products in several Latin American countries for 2016.[172]

Starbucks and music streaming service Spotify entered a partnership in May 2015. U.S.-based employees were given a Spotify premium subscription and encouraged to help influence the music played in store via playlists made using Spotify.[173]

Parodies and infringements

Starbucks has been a target of parodies and imitations of its logo, particularly the 1992 version, and has used legal action against those it perceives to be infringing on its intellectual property. 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 the cover of one of his comics; later placing 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 case was eventually settled out of court, as Dwyer claimed he did not have the financial ability to endure a trial case with Starbucks. 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 was allowed to display the image as an expression of free speech, but he can no longer sell it.[174] In a similar case, a New York store selling stickers and T-shirts using the Starbucks logo with the phrase "Fuck Off" was sued by the company in 1999.[175][176] An anti-Starbucks website, starbuckscoffee.co.uk, which encouraged people to deface the Starbucks logo[177] was transferred to Starbucks in 2005,[178][179] but has since resurfaced at www.starbuckscoffee.org.uk. Christian bookstores and websites in the US are selling a T-shirt featuring a logo with the siren replaced by Jesus and the words "Sacrificed for me" around the edge.[180]

Other successful cases filed by Starbucks include the case won in 2006 against the chain Xingbake in Shanghai, China for trademark infringement, because the chain used a green-and-white circular logo with a name that sounded phonetically similar to the Chinese for Starbucks.[181] Starbucks did not open any stores after first registering its trademark in Russia in 1997 and in 2002 a Russian lawyer successfully filed a request to cancel the trademark. He then registered the name with a Moscow company and asked for $600,000 to sell the trademark to Starbucks, but was ruled against in November 2005.[38]

In 2003, Starbucks sent a cease-and-desist letter to "HaidaBucks Coffee House" in Masset, British Columbia, Canada. The store was owned by a group of young Haida men, who claimed that the name was a coincidence, due to "buck" being a Haida word for "young man" (a claim that cannot be substantiated). After facing criticism, Starbucks dropped its demand after HaidaBucks dropped "coffee house" from its name.[182] Sam Buck Lundberg, who owns a coffee store in Oregon, was prohibited from using "Sambuck's Coffee" on the shop front in 2006.[183] Starbucks lost a trademark infringement case against a smaller coffee vendor in South Korea that operates coffee stations under the name Starpreya. The company, Elpreya, says Starpreya is named after the Norse goddess, Freja, with the letters of that name changed to ease pronunciation by Koreans. The court rejected Starbucks' claim that the logo of Starpreya is too similar to their own logo.[184] A bar owner in Galveston, Texas, USA won the right to sell "Star Bock Beer" after a lawsuit by Starbucks in 2003 after he registered the name, but the 2005 federal court ruling also stated that the sale of the beer must be restricted to Galveston, a ruling upheld by the Supreme Court in 2007.[185]

"Rat City Rollergirls" logo

Ongoing cases include a dispute over the copyright application for Seattle's Rat City Rollergirls logo in 2008.[186] The company claimed the roller derby league's logo by a Washington artist[187] was too similar to its own. Starbucks requested an extension to further examine the issue and possibly issue a complaint, which was granted by the Trademark Office. The July 16, 2008 deadline passed without action by the corporation.[188]

Starbucks launched action against an Indian cosmetics business run by Shahnaz Husain, after she applied to register the name Starstruck for coffee and related products. She said she aimed to open a chain of stores that would sell coffee and chocolate-based cosmetics.[189] A cafe in Al-Manara Square,[190] Ramallah, Palestinian Territories, opened in 2009 with the name "Stars and Bucks" and a logo using a similar green circle and block lettering.[191] Like Starbucks, the Stars and Bucks serves cappuccinos in ceramic cups, and offers free Wifi. According to speculation cited in the Seattle Post Intelligencer, the cafe's name and imitation Starbucks style may be a political satire of American consumerism. Starbucks is not known to have taken action against this business.

In 2014, Nathan Fielder, a Canadian comedian behind the hit show Nathan for You, opened a store called "Dumb Starbucks Coffee" in Los Feliz, Los Angeles CA. The store resembled a typical Starbucks with one exception: everything was preceded by the word "dumb." For example, the drinks he carried included Dumb Skinny Vanilla Lattes and Dumb Frapuccinos.[192] The store carried music titled "Dumb Jazz Standards" and "Dumb Norah Jones Duets." [193] He thought he could bypass infringement and copyright claims through the "Parody Law", referring to the parody aspect of Fair Use laws (think Weird Al Yankovich and SNL). No lawsuits were filed though because the store was short-lived. The Los Angeles Health Department shut it down after 4 days because Fielder lacked the proper permits.[194][195]

Others have used the Starbucks logo unaltered and without permission, such as a café in Pakistan that used the logo in 2003 in its advertisements[196] and a cafe in Cambodia in 2009, the owner saying that "whatever we have done we have done within the law".[197]

Environmental and social policies

Environmental impact

Grounds for your Garden

In 1999, Starbucks started "Grounds for your Garden" to make their business environmentally friendlier. This gives leftover coffee grounds to anyone requesting it for composting. Although not all stores and regions participate, customers can request and lobby their local store to begin the practice.

In 2004, Starbucks began reducing the size of their paper napkins and store garbage bags, and lightening their solid waste production by 816.5 t (1,800,000 lb).[198] In 2008, Starbucks was ranked No.15 on the U.S. Environmental Protection Agency's list of Top 25 Green Power Partners for purchases of renewable energy.[199]

In October 2008, The Sun newspaper reported that Starbucks was wasting 23.4 million liters (6.2 million US gal) of water a day by leaving a tap constantly running for rinsing utensils in a 'dipper well' in each of its stores,[200] but this is often required by governmental public health code.[201]

In June 2009, in response to concerns over its excessive water consumption, Starbucks re-evaluated its use of the dipper well system. In September 2009, company-operated Starbucks stores in Canada and the United States successfully implemented a new water saving solution that meets government health standards. Different types of milk are given a dedicated spoon that remains in the pitcher and the dipper wells were replaced with push button metered faucets for rinsing. This will reportedly save up to 150 US gal (570 l) of water per day in every store.[202]

Recycling

A bin overflowing with Starbucks cups

Starbucks began using 10% recycled paper in its beverage cups in 2006—the company claimed that the initiative was the first time that recycled material had been used in a product that came into direct contact with a food or beverage.[203] Allen Hershkowitz of the Natural Resources Defense Council called the 10% content "minuscule",[203] but Starbucks received the National Recycling Coalition Recycling Works Award in 2005 for the initiative.[204]

In a 2008 media article, Starbucks' vice president of corporate social responsibility acknowledged that the company continued to struggle with environmental responsibility, as none of its cups were recyclable and stores did not have recycling bins. At the time that the article was published, Starbucks gave customers who brought in their own reusable cup a 10-cent discount, in addition to using corrugated cup sleeves made from 85 percent post-consumer recycled fiber, which is 34 percent less paper than the original. During the same period, Starbucks entered into a partnership with Conservation International—pledging US$7.5 million over three years—to help protect the natural environment of coffee-growing communities in Mexico and Indonesia.[205]

Coffee and Farmer Equity practices

Starbucks began drafting plans for corporate social responsibility in 1994.[206] Since, Starbucks has partnered with Conservation International (CI) to draft plans and audit its Coffee and Farmer Equity program.[207] Starbucks’ C.A.F.E. practices are based on a rating system of 249 indicators. Farmers who earn high overall scores receive higher prices than those who achieve lower scores. Ratings categories include: economic accountability, social responsibility, environmental leadership in coffee growing and processing. Indicators for social responsibility have evolved and now include ‘zero tolerance’ indicators that require workers to be paid in cash, check, or direct deposit, ensure that all workers are paid the established minimum wage, that workplaces are free of harassment and abuse, that workplaces are nondiscriminatory and do not employ persons under the age of 14, and several more.[208] Starbucks has moved 90% of its coffee purchases to preferred C.A.F.E. certified providers, and the company is approaching its stated goal to purchase 100% of its coffee through C.A.F.E. or other 'ethically sourced' certification systems.[207] Washington State University Assistant Professor Daniel Jaffee argues that Starbucks' C.A.F.E. practices merely 'green wash' "to burnish their corporate image."[209] Additionally, Professor Marie-Christine Renard of Rural Sociology of Chapingo University in Mexico wrote a case study of Starbucks’, Conservation International's, and Agro-industries United of Mexico (AMSA) joint conservation effort in Chiapas, Mexico in which she concluded that "[w]hile the CI-Starbucks-AMSA Alliance paid better prices, it did not allow the producers to appropriate the knowledge that was necessary for the organizations to improve the quality of their coffee."[210]

Fair trade

Starbucks coffee beans

In 2000, the company introduced a line of fair trade products.[211] Of the approximately 136,000 metric tons (300 million pounds) of coffee Starbucks purchased in 2006, only about 6% was certified as fair trade.[212]

According to Starbucks, they purchased 2,180 metric tons (4.8 million pounds) of Certified Fair Trade coffee in fiscal year 2004 and 5,220 metric tons (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). Transfair USA,[213] a 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:

Since launching its FTC coffee line in 2000, Starbucks has undeniably made a significant contribution to family farmers through their rapidly growing FTC coffee volume. 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.

All espresso roast sold in the UK and Ireland is Fairtrade.[214] Questions have been raised regarding the legitimacy of the Fair Trade designation.[215]

Groups such as Global Exchange are calling for Starbucks to further increase its sales of fair trade coffees.[216]

According to Starbucks, in 2004 it paid on average $1.42 per pound ($2.64 kg) for high-quality coffee beans, 74% above the commodity prices at the time.[217]

After a long-running dispute between Starbucks and Ethiopia, Starbucks agreed to support and promote Ethiopian coffees. An article in BBC NEWS,[218] states that Ethiopian ownership of popular coffee designations such as Harrar and Sidamo is acknowledged, even if they are not registered. Ethiopia fought hard for this acknowledgement mainly to help give its poverty-stricken farmers a chance to make more money. Unfortunately, this has not been the case. In 2006 Starbucks says it paid $1.42 per pound for its coffee. The coffee Starbucks bought for $1.42 per pound, had a selling price—after transportation, processing, marketing, store rentals, taxes, and staff salary and benefits—of $10.99 per pound.[219] As of August 2010, the Starbucks website sells only one Ethiopian coffee, which it says is new.

In addition, Starbucks is an active member of the World Cocoa Foundation.

Ethos water

Ethos, a brand of bottled water acquired by Starbucks in 2003, is sold at locations throughout North America. Ethos bottles feature prominent labeling stating "helping children get clean water", referring to the fact that US$0.05 from each US$1.80 bottle sold (US$0.10 per bottle in Canada) is used to fund clean water projects in under-developed areas. Although sales of Ethos water have raised over US$6,200,000 for clean water efforts, the brand is not incorporated as a charity. Critics have argued that the claim on the label misleads consumers into thinking that Ethos is primarily a charitable organization, when it is actually a for-profit brand and the vast majority of the sale price (97.2%) does not support clean-water projects.[220][221] The founders of Ethos have stated that the brand is intended to raise awareness of third-world clean water issues and provide socially responsible consumers with an opportunity to support the cause by choosing Ethos over other brands.[222] Starbucks has since redesigned the American version of the Ethos water bottles, stating the amount of money donated per bottle in the description.

Food bank donations

Since 2010, Starbucks has been donating leftover pastries in the United States to local food banks through a food collection service named Food Donation Connection.[223]

In March 2016, Starbucks unveiled a five-year plan to donate 100 percent of unsold food from its 7,600 company-operated stores in the U.S. to local food banks and pantries.[224] Perishable food will be transported in refrigerated trucks to area food banks through the company's partnerships with the Food Donation Connection and Feeding America. This program, called FoodShare, is expected to provide up to 50 million meals over the next five years.[225]

Controversies

A local coffee shop in New York's East Village claiming it had to close because Starbucks is willing to pay higher rent for the space

Starbucks has been accused of selling unhealthy products.[226][227][228][229]

Market strategy

Starbucks footprint in the United States, showing saturation of metropolitan areas

Some of the methods Starbucks has used to expand and maintain their dominant market position, including buying out competitors' leases, intentionally operating at a loss, and clustering several locations in a small geographical area (i.e., saturating the market), have been labeled anti-competitive by critics.[230] For example, Starbucks fueled its initial expansion into the UK market with a buyout of Seattle Coffee Company, but then used its capital and influence to obtain prime locations, some of which operated at a financial loss. Critics claimed this was an unfair attempt to drive out small, independent competitors, who could not afford to pay inflated prices for premium real estate.[231]

While relations with independent coffeehouse chains have been strained, some owners have credited Starbucks with educating customers on coffee.[232]

Labor disputes

Starbucks workers in seven stores have joined the Industrial Workers of the World (IWW) as the Starbucks Workers Union since 2004.[233]

According to a Starbucks Union press release, since then the union membership has begun expanding to Chicago and Maryland in addition to New York City, where the movement originated.[234][235] On March 7, 2006, the IWW and Starbucks agreed to a National Labor Relations Board settlement in which three Starbucks workers were granted almost US$2,000 in back wages and two fired employees were offered reinstatement.[236][237][238] According to the Starbucks Union, on November 24, 2006, IWW members picketed Starbucks locations in more than 50 cities around the world in countries including Australia, Canada, Germany, and the UK, as well as U.S. cities including New York, Chicago, Minneapolis and San Francisco,[239] to protest the firing of five Starbucks Workers Union organizers by Starbucks and to demand their reinstatement.

The Reverend Billy leading an anti-Starbucks protest in Austin, Texas in 2007

Some Starbucks baristas in Canada,[240] Australia and New Zealand,[241] and the United States[242] belong to a variety of unions.

In 2005, Starbucks paid out US$165,000 to eight employees at its Kent, Washington, roasting plant to settle charges that they had been retaliated against for being pro-union. At the time, the plant workers were represented by the International Union of Operating Engineers. Starbucks admitted no wrongdoing in the settlement.[233]

A Starbucks strike occurred in Auckland, New Zealand, on November 23, 2005.[241] Organized by Unite Union, workers sought secure hours, a minimum wage of NZ$12 an hour, and the abolition of youth rates. The company settled with the Union in 2006, resulting in pay increases, increased security of hours, and an improvement in youth rates.[243]

In March 2008, Starbucks was ordered to pay baristas over US$100 million in back tips in a Californian class action lawsuit launched by baristas alleging that granting shift-supervisors a portion of tips violates state labor laws. The company plans to appeal. Similarly, an 18-year-old barista in Chestnut Hill, MA has filed another suit with regards to the tipping policy. Massachusetts law also states that managers may not get a cut of tips.[244][245] A similar lawsuit was also filed in Minnesota on March 27, 2008.[246]

"War On Christmas"

In November 2015, Starbucks introduced solid red seasonal cups, unlike previous seasonal iterations that were decorated with winter or Christmas-oriented imagery (such as reindeer and ornaments), but no overtly religious symbols. The cup design was discussed extensively on social media, with some citing the cup as another example of the "War on Christmas", calling it "cup-gate", and others expressed puzzlement over the outrage generated by a simple cup.[247][248][249] The red cups were discussed so much that a man named Joshua Feuerstien posted all over social media telling people to have the baristas write "Merry Christmas" on the cups as their name, so that way baristas had to call off the drinks saying "Merry Christmas". This also started the trend #MerryChristmasStarbucks.[250]

Opening without planning permission

Starbucks has been accused by local authorities of opening several stores in the UK in retail premises, without the planning permission for a change of use to a restaurant. Starbucks has argued that "Under current planning law, there is no official classification of coffee shops. Starbucks therefore encounters the difficult scenario whereby local authorities interpret the guidance in different ways. In some instances, coffee shops operate under A1 permission, some as mixed use A1/A3 and some as A3".[251]

In May 2008, a branch of Starbucks was completed on St. James's Street in Kemptown, Brighton, England, despite having been refused permission by the local planning authority, Brighton and Hove City Council, who claimed there were too many coffee shops already present on the street.[252][253] Starbucks appealed the decision by claiming it was a retail store selling bags of coffee, mugs and sandwiches, gaining a six-month extension,[254] but the council ordered Starbucks to remove all tables and chairs from the premises, to comply with planning regulations for a retail shop.[255] 2500 residents signed a petition against the store,[256] but after a public inquiry in June 2009 a government inspector gave permission for the store to remain.[257]

A Starbucks in Hertford won its appeal in April 2009 after being open for over a year without planning permission.[258] Two stores in Edinburgh,[259] one in Manchester,[260] one in Cardiff,[261] one in Pinner and Harrow, were also opened without planning permission.[251] The Pinner cafe, opened in 2007, won an appeal to stay open in 2010.[262] One in Blackheath, Lewisham[263] was also under investigation in 2002 for breach of its licence, operating as a restaurant when it only had a licence for four seats and was limited to take away options. There was a considerable backlash from members of the local community who opposed any large chains opening in what is a conservation area. To this date, the Starbucks is still operating as a takeaway outlet.

Israel

A store on Piccadilly with its windows boarded up after being smashed by protesters
A damaged front window of a Starbucks coffee shop in Toronto

There have been calls for boycott of Starbucks stores and products because it has been wrongly claimed that Starbucks sends part of its profits to the Israeli military,[264] but such allegations are based on a hoax letter attributed to the President, Chairman and CEO of Starbucks Howard Schultz, who is Jewish[265] and supports Israel's right to exist.[266] He is a recipient of several Israeli awards including "The Israel 50th Anniversary Tribute Award" for "playing a key role in promoting a close alliance between the United States and Israel".[267]

The hoax letter claiming that Schultz had donated money to the Israeli military was actually written by an Australian weblogger, Andrew Winkler, who has admitted fabricating the document.[266][268] Starbucks responded to these claims, widely circulated on the internet, stating that "Neither Chairman Howard Schultz nor Starbucks fund support the Israeli Army. Starbucks is a non-political organization and does not support individual political causes".[267] The protests against Starbucks derived from the Winkler letter were not the first; earlier protests occurred in June 2002 in Cairo, Dubai and Beirut universities in response to Schultz's criticism of Yasser Arafat.[268] Starbucks has been a regular target of activists protesting against Israel's role in the Gaza War over the claims.

Organizations have urged a boycott of Starbucks, accusing Starbucks of serving as an ally of Israeli militarists.[269][270] Starbucks was forced to close a store in Beirut, Lebanon due to demonstrators shouting anti-Israel slogans and causing customers to flee.[271] Demonstrators hung several banners on the shop's window and used white tape to paste a Star of David over the green-and-white Starbucks sign. They also distributed a letter saying, Schultz "...is one of the pillars of the American Jewish lobby and the owner of the Starbucks," which they said donates money to the Israeli military.[272]

On January 2009, two Starbucks stores in London were the target of vandalism by pro-Palestinian demonstrators who broke windows and reportedly ripped out fittings and equipment after clashes with riot police.[273][274][275][276][277][278]

"The Way I See It"

Quotes by artists, writers, scientists and others have appeared on Starbucks cups since 2005 in a campaign called "The Way I See It".[279] Some of the quotes have caused controversy, including one by writer Armistead Maupin and another by Jonathan Wells that linked 'Darwinism' to eugenics, abortion and racism.[280] Disclaimers were added to the cups noting that these views were not necessarily those of Starbucks.[281]

US military viral email

A US Marines Sergeant emailed ten of his friends in August 2004 having wrongly been told that Starbucks had stopped supplying the military with coffee donations because the company did not support the Iraq War. The email became viral, being sent to tens of millions of people. Starbucks and the originator sent out a correction,[282] but Starbucks' VP of global communications, Valerie O'Neil, said in September 2009 that the email was still being forwarded to her every few weeks.[283][284][285]

Gun controversy

As gun laws in many US states have become more relaxed, and more states have adopted open carry or concealed carry statutes, some gun owners have begun carrying guns while performing everyday shopping or other tasks. Many stores and companies have responded by banning the carrying of guns on their premises, as allowed by many states' local laws. Starbucks has not instituted a policy banning guns in their stores.

In 2010, the Brady Campaign proposed a boycott of Starbucks due to their gun policy.[286][287] At that time, Starbucks released a statement saying "We comply with local laws and statutes in all the communities we serve. That means we abide by the laws that permit open carry in 43 U.S. states. Where these laws don't exist, openly carrying weapons in our stores is prohibited. The political, policy and legal debates around these issues belong in the legislatures and courts, not in our stores."[288][289]

In 2012, the National Gun Victims Action Council published an open letter to Starbucks, asking them to revise their policy, and also proposed a "Brew not Bullets" boycott of the chain until the policy is changed, with Valentine's Day selected as a particular day to boycott the chain.[290][291][292]

In response, gun rights advocates started a counter "Starbucks Appreciation Day" buycott to support Starbucks' stance, and suggested paying for products using two-dollar bills as a sign of Second Amendment support.[293][294][295]

On July 29, 2013, Moms Demand Action for Gun Sense in America, initiated a petition demanding a ban on guns in Starbucks stores.[296]

On September 17, 2013, founder and CEO Howard Schultz asked customers to no longer bring guns into its stores. He made the comments in an open letter on the company's website. Schultz said he was not banning guns, but making a request.[297]

Same-sex marriage

In January 2012, a Starbucks executive stated it supports the legalization of same-sex marriage. This resulted in a boycott by the National Organization for Marriage, a political organization that opposes same-sex marriage, who received 22,000 signatures in favor of their boycott.[298] In response, CEO Howard Schultz had this to say: "If you feel, respectfully, that you can get a higher return than the 38 percent you got last year, it's a free country. You can sell your shares of Starbucks and buy shares in another company. Thank you very much."[299] In addition, 640,000 people also signed a petition thanking Starbucks for its support.[300]

European tax avoidance

In October 2012, Starbucks faced criticism after a Reuters investigation found that the company reportedly paid only £8.6 million in corporation tax in the UK over 14 years, despite generating over £3 billion in sales—this included no tax payments on £1.3 billion of sales in the three years prior to 2012.[301][302] It is alleged that Starbucks was able to do this by charging high licencing fees to the UK branch of the business, allowing them to declare a £33 million loss in 2011.[303] The UK subsidiary pays patent fees to the US subsidiary, purchases coffee beans from the Netherlands subsidiary (where corporation tax is lower than in the UK), and uses the Swiss subsidiary for other "miscellaneous services".[304] A YouGov survey suggested that Starbucks' brand image was substantially weakened by the controversy surrounding how much tax it pays in the UK several weeks after the allegations surfaced.[305]

Starbucks' chief financial officer (CFO) appeared before the Public Accounts Committee in November 2012 and admitted that the Dutch government granted a special tax rate to their European headquarters, which the UK business pays royalties to.[306] Dutch law permits companies to transfer royalties collected from other countries to tax havens without incurring taxes, unlike in the rest of the EU.[307] The CFO denied that they chose the Netherlands as their European headquarters to avoid tax, explaining that the company's Dutch coffee roasting plant was the reason for the decision.[306] Until 2009, the royalty rate was 6% of UK sales, but after being challenged by UK tax authorities it was reduced to 4.7%.[307] The CFO told the committee this reflected costs such as designing new stores and products, but admitted that there was no detailed analysis by which the rate is decided. The coffee they serve in the UK is purchased from the Swiss subsidiary, which charges a 20% markup on the wholesale price and pays 12% corporation tax on profits.[306] Coffee is not transported to Switzerland but the 30 people who work in the subsidiary assess coffee quality. Regarding Starbucks' frequent reports of loss in the UK, the CFO told the committee that Starbucks are "not at all pleased" about their financial performance in the UK.[306] MPs replied that it "just doesn't ring true" that the business made a loss, pointing out that the head of the business had been promoted to a new post in the US and they consistently told shareholders that the business was profitable.[301][308]

In Ireland, Starbucks' subsidiary Ritea only paid €35,000 in tax between 2005 and 2011 and the subsidiary recorded losses in every year other than 2011. Ritea is owned by Netherlands-based Starbucks Coffee Emea.[309] Their French and German subsidiaries make large losses because they are heavily in debt to the Dutch subsidiary, which charges them higher interest rates than the group pays to borrow. Reuters calculated that without paying interest on the loans and royalty fees, the French and German subsidiaries would have paid €3.4 million in tax. The Dutch subsidiary that royalties are paid to made a €507,000 profit in 2011 from revenues of €73 million, while the company that roasts coffee made a profit of €2 million in 2011 and paid tax of €870,000.[307]

Protesters, who were unimpressed by the company's offer to pay £20 million in tax over the next two years, staged demonstrations in December 2012 in affiliation with UK Uncut.[310]

In June 2014 the European Commission anti-trust regulator launched an investigation of the company's tax practices in the Netherlands, as part of a wider probe of multi-national companies' tax arrangements in various European countries.[311] The investigation ended in October 2015, with the EC ordering Starbucks to pay up to €30 million in overdue taxes, which the EC regards as illegal state support for corporations. A pair of economists from the KU Leuven noted that the Commission did not forbid Starbucks's tax construction as such, pretending that Starbucks is a Dutch company and effectively rewarding the Dutch state for its lenient tax policy.[312]

Chinese pricing

In October 2013, China Central Television accused Chinese Starbucks of over-pricing. The report compared the price of a tall (12 fl. oz., 354 mL) Latte in Beijing, Chicago, London, and Mumbai. It was found that Beijing stores charged the most while Mumbai stores charged the least. It was also found that a tall latte cost 4 Chinese yuan (approx. USD $0.67) to make, but it sold at 27 yuan (approx. USD $4.50).[313][314]

#Racetogether marketing campaign

On Monday, March 16, 2015,[315] Starbucks launched a marketing campaign to promote conversations about race between customers and employees.[316] This marketing campaign also called for baristas to draw the race together hashtag on customers' cups - similar to how Starbucks is already known for drawing customers' names on each cup. It was characterised as a "fiasco" by some media outlets,[317][318][319][320] to the extent that Starbucks' vice president of public relations deleted his Twitter account.[321][322] On March 22, Starbucks CEO advised his employees there is no longer a need to write #racetogether on cups. Reuters reported that "Starbucks said the phase of the campaign that involved messages on drink cups was always scheduled to end Sunday."[248][323]

Music, film, and television

Main article: Hear Music
Starbucks' second Hear Music Coffeehouse at the South Bank development adjacent to the River Walk in downtown San Antonio, Texas.

Hear Music is the brand name of Starbucks' retail music concept. Hear Music began as a catalog company in 1990, adding a few retail locations in the San Francisco Bay Area. Hear Music was purchased by Starbucks in 1999. Nearly three years later, in 2002, they produced a Starbucks opera album, featuring artists such as Luciano Pavarotti, followed in March 2007 by the hit CD "Memory Almost Full" by Paul McCartney, making McCartney the first artist signed to New Hear Music Label sold in Starbucks outlets. Its inaugural release was a big non-coffee event for Starbucks the first quarter of 2007.

In 2006, the company created Starbucks Entertainment, one of the producers of the 2006 film Akeelah and the Bee. Retail stores advertised the film before its release and sold the DVD.[324]

Starbucks has become the subject of a protest song, "A Rock Star Bucks a Coffee Shop" by Neil Young and his band, Promise of the Real. The single from Young's album, The Monsanto Years aims at Starbucks' alleged use of genetically modified food, but also at the GMO company Monsanto.[325][326] By May 31, 2015, the song was Video of the week on the Food Consumer website.[327]

See also

References

  1. 1 2 3 "Loxcel Starbucks Map". Starbucks. November 4, 2016. Retrieved Nov 4, 2016.
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