STARBUCKS CORPORATION

Starbucks Corporation

Starbucks Corporation

As of October 2007, Starbucks had 10,200 company-owned outlets worldwide: 6,893 of them in the United States and 1,722 in other countries and U.S. territories. In addition, the company has 6,506 joint-venture and licensed outlets, 3,891 of them in the United States and 2,615 in other countries and U.S. territories. These joint ventures most notably include Barnes & Noble bookstores, Target Corporation retail centers, and Safeway Inc. grocery stores. This brings the total locations (as of November 2007) to 15,011 worldwide.[3] Starbucks can be found in many popular grocery chains in the U.S., Canada and the UK, as well as in many airports.

There is growing concern, however, that many licensed stores are hurting the image of the Starbucks brand. Employees at these stores are not employees of Starbucks, but rather the locale in which they're located. Customers complain that these stores do not meet expectations by citing poor customer service, sub-standard drink quality, and an unfriendly atmosphere. [9] Since most customers do not differentiate between a licensed and corporate location, Starbucks takes these complaints seriously. In April 2008, Starbucks closed 45 licensed locations in Nevada and Northern California, and a Starbucks spokeswoman did not deny plans to end license relationships at other sites in the future. (Cooper and Robert, 2007, 11-16)

In 1992 and 1993 Starbucks developed a three-year geographic expansion strategy that targeted areas which not only had favorable demographic profiles but which also could be serviced and supported by the company's operations infrastructure. For each targeted region, Starbucks selected a large city to serve as a "hub"; teams of professionals were located in hub cities to support the goal of opening 20 or more stores in the hub in the first two years. Once stores blanketed the hub, then additional stores were opened in smaller, surrounding "spoke" areas in the region. To oversee the expansion process, Starbucks created zone vice presidents to direct the development of each region and to implant the Starbucks culture in the newly opened stores. All of the new zone vice presidents Starbucks recruited came with extensive operating and marketing experience in chain-store retailing. (Cooper and Robert, 2007, 11-16)

Starbucks' store launches grew steadily more successful. In 1995, new stores generated an average of $700,000 in revenue in their first year, far more than the average of $427,000 in 1990. This was partly due to the growing reputation of the Starbucks brand. In more and more instances, Starbucks' reputation reached new markets even before stores opened. Moreover, existing stores continued to post year-to-year gains in sales.

Starbucks had notable success in identifying top retailing sites for its stores. The company had the best real estate team in the coffee-bar industry and a sophisticated system that enabled it to identify not only the most attractive individual city blocks but also the exact store location that was best. The company's site location track record was so good that as of 1997 it had closed only 2 of the 1,500 sites it had ...