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Brand

Starbucks

  • Established

    1971

  • Number of staff

    191,000

  • Head office

    Seattle, Washington, US

  • Sector

    Food & drink

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Milestones

About Starbucks

The company began in 1971 with a single store in Seattle’s historic Pike Place Market. Its name, inspired by a character in Herman Melville’s Moby-Dick, was part of a bid to evoke the romance of the high seas and the seafaring tradition of early coffee traders.

From a single storefront, Starbucks set out to offer better coffee than anywhere else in the world, taking a strict line on the fresh-roasted, whole beans it would use in its product. Today, the company has more than 24,000 stores in 70 countries. It entered the European market in 1998, with its acquisition of 65 Seattle Coffee Company shops in the UK. It opened its debut store on London’s King’s Road and pledged to have more than 80 British coffee shops by the end of that year; there are now more than 800 in the UK.

The driving force behind the Starbucks empire, Howard Schultz, joined the company in 1982 as chairman and chief executive. Two years later, he returned from a business trip to Italy with a vision to bring the Italian coffeehouse tradition to the US.

He wanted Starbucks to be much more than just somewhere to get coffee; he wanted it to be a place for conversation and a sense of community and connection. After leaving Starbucks, he set up his own Il Giornale coffee houses in 1985, but returned in 1987 to purchase Starbucks with the help of local investors. By the end of the financial year there were 17 stores.

Schultz’s mission for Starbucks was, and continues to be, to “inspire and nurture the human spirit – one person, one cup, and one neighbourhood at a time”, creating a place for conversation, a sense of community, and a third space between work and home.

He is seen as a visionary, particularly when it comes to employee engagement: in 1988, Starbucks started offering a full health benefits package to all its employees, including coverage for domestic partnerships and, in 1991, it became the first privately owned company to offer a stock-option programme that included part-time staff. A year later, it had completed its IPO and had grown to 165 coffee shops.

Schultz has always been very vocal about his commitment to fair trade and ethical sourcing, creating the company’s Shared Planet programme, which commits to responsible business sourcing and practices. Last year, Starbucks hit its target of 99% of its coffee being ethically sourced.

Around 2008, Starbucks hit turbulent times amid concerns about the quality of its coffee, ubiquity on the high street and high calorie content of some of its extravagantly named drinks, from Frappucino to Iced Hazelnut Mocha with whipped cream. It announced the first quarterly loss in its 15-year history - $6.7m after tax (£3.4m), compared with a $158m profit for the same quarter in the previous year. These concerns continue to linger and are accompanied by new ones, such as whether the brand is dodging tax payments, an allegation that flies in the face of its positioning as a good corporate citizen with community benefit at its core.

While its heartland business still remains firmly in coffee, when Starbucks celebrated its 40th anniversary in 2011 it sent a clear message to the world that its ambitions go far beyond the humble coffee bean – it unveiled a new global brand identity and ditched the word “coffee”. At the time, Schultz said the company was at a “very important point” in its history and needed a “new blueprint for profitability”.

Indeed, in such a now-crowded market, Starbucks’ marketing challenges are to fully use the mobile channel to its advantage and deliver products in new ways. Nevertheless, in 2014, when unveiling his five-year strategy to boost annual sales to $30bn, Schultz declared that he had never felt “more optimistic” or “more enthused” about the brand’s future.