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Starbucks Corporation is an international coffee and coffeehouse chain based in Seattle, Washington, USA. Starbucks is the largest coffeehouse company in the world, with 16,120 stores in 44 countries. Starbucks sells drip brewed coffee, espresso-based hot drinks, other hot and cold drinks, snacks, and items such as mugs and coffee beans. Through the Starbucks Entertainment division and Hear Music brand, the company also markets books, music, and film. Many of the company's products are seasonal or specific to the locality of the store.
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Starbucks Corporation is an international coffee and coffeehouse chain based in Seattle, Washington, USA. Starbucks is the largest coffeehouse company in the world, with 16,120 stores in 44 countries. Starbucks sells drip brewed coffee, espresso-based hot drinks, other hot and cold drinks, snacks, and items such as mugs and coffee beans. Through the Starbucks Entertainment division and Hear Music brand, the company also markets books, music, and film. Many of the company's products are seasonal or specific to the locality of the store. Starbucks-brand ice cream and coffee are also sold at grocery stores.
From Starbucks' founding in Seattle as a local coffee bean roaster and retailer, the company has expanded rapidly. In the 1990s, Starbucks was opening a new store every workday, a pace that continued into the 2000s. Domestic growth has since slowed, although the company continues to expand in foreign markets and will open a net of 900 new stores outside of the U.S. in 2009. The first location outside of the United States and Canada was established in 1990s, and they now constitute almost one third of Starbucks' stores.
As of early 2009, Starbucks has more than 16,000 stores in 58 countries worldwide, 11,006 of which are located in the United States, followed by Canada with 976 and Japan with 845 locations. On July 1, 2008, the company announced it was closing 600 under-performing company-owned stores and cutting U.S. expansion plans amid growing economic uncertainty. 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 are layoffs and the rest are unfilled jobs. These closings and layoffs have effectively ended the company’s period of growth and expansion that began in the mid-1990s.
On January 28, 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.
History
The original Starbucks was opened in Pike Place Market in Seattle, Washington, in 1971 by three partners: English teacher Jerry Baldwin, history teacher Zev Siegel, and writer Gordon Bowker. The three were inspired by Alfred Peet, whom they knew personally, to open their first store in Pike Place Market to sell high-quality coffee beans and equipment. The original Starbucks location was at 2000 Western Avenue from 1971–1976. That store then moved to 1912 Pike Place; it is still open. During their first year of operation, they purchased green coffee beans from Peet's, then began buying directly from growers.
Entrepreneur Howard Schultz joined the company in 1982, and, after a trip to Milan, Italy, advised that the company should sell coffee and espresso drinks as well as beans. The owners rejected this idea, believing that getting into the beverage business would distract the company from its primary focus. To them, coffee was something to be prepared in the home. Certain that there was much money to be made selling drinks to on-the-go Americans, Schultz started the Il Giornale coffee bar chain in 1985.
In 1984, the original owners of Starbucks, led by Baldwin, took the opportunity to purchase Peet's (Baldwin still works there today). In 1987, they sold the Starbucks chain to Schultz's Il Giornale, which rebranded the Il Giornale outlets as Starbucks and quickly began to expand. Starbucks opened its first locations outside Seattle at Waterfront Station in Vancouver, British Columbia, and Chicago, Illinois, that same year. At the time of its initial public offering on the stock market in 1992, Starbucks had grown to 165 outlets.
The first Starbucks location outside of North America opened in Tokyo in 1996. Starbucks entered the U.K. market in 1998 with the acquisition of the then 60-outlet, UK-based Seattle Coffee Company, re-branding all its stores as Starbucks. By November 2005, London had more outlets than Manhattan, a sign of Starbucks becoming an international brand.
In 1999, Starbucks experimented with eateries in the San Francisco Bay area through a restaurant chain called Circadia. These restaurants were soon "outed" as Starbucks establishments and converted to Starbucks cafes.
In April 2003, Starbucks completed the purchase of Seattle's Best Coffee and Torrefazione Italia from AFC Enterprises, bringing the total number of Starbucks-operated locations worldwide to more than 6,400. On September 14, 2006, rival Diedrich Coffee announced that it would sell most of its company-owned retail stores to Starbucks. This sale includes the company-owned locations of the Oregon-based Coffee People chain. Starbucks has converted the Diedrich Coffee and Coffee People locations to Starbucks as of summer 2007, although the Portland airport Coffee People locations were excluded from the sale.
Starbucks' chairman, Howard Schultz, has talked about making sure growth does not dilute the company's culture and the common goal of the company's leadership to act like a small company.
In January 2008, Chairman Howard Schultz resumed his roles as President and Chief Executive Officer after an eight year hiatus, and replaced Jim Donald, who took those posts in 2005 but decided to leave the company in late 2007. Schultz's principal challenge is 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. On January 31, 2008, Schultz announced that Starbucks would discontinue its warm breakfast sandwich products, originally scheduled to launch nationwide in 2008, in order to refocus the brand on all things coffee. On February 23, Starbucks closed its stores from 5:30 p.m. to 9 p.m. local time to train its baristas.
As Starbucks often tests new products as part of its ongoing innovation and transformation, Starbucks started testing selling an 8 oz "short" brewed coffee for $1 and giving free refills on all brewed coffee. This test was limited to the greater Seattle market, with no plans for expansion to national markets. Per an internal email this program was cancelled in late March 2008.
In March 2008, Schultz made several announcements to Starbucks shareholders. Shultz introduced Starbucks' "state of the art espresso system", the Thermoplan AG manufactured Mastrena, which replaced their previous superauto, the Thermoplan Verismo 801(known internationally as the Thermoplan Black & White). Starbucks also announced that the company hopes to enter the energy drink market and introduce a customer reward program. Pre-ground beans will also no longer be used, in order that the additional grinding of all whole bean coffee will "bring aroma, romance and theater" to American stores. The company also announced the recent acquisition of The Coffee Equipment Company, the manufacturer of the Clover Brewing System. They are currently test marketing this unique "fresh-pressed" coffee system at six Starbucks locations, three in Seattle, and three in Boston.
In May 2008, a rewards program was initiated for registered users of the Starbucks Card. Previously simply a gift card, the Starbucks Card has undergone a transition into a rewards card, similar to cards offered by other retail outlets. Perks and rewards offered to registered users are 2 hours of free Wi-Fi Internet service per day, free refills of brewed coffee (some locations only honour this for the first 3 hours of your stay), a free tall beverage with the purchase of 1 lb. of whole bean coffee, as well as free milk (e.g. soy) and syrup drink modifiers. This is a new and aggressive approach by Starbucks to create and strengthen customer loyalty.
Tags displaying the title "Master" are worn by employees who have completed the Coffee Master course, which educates employees in not only the tasting, but also growing regions, roasting, and purchasing (including fair trade practices) aspects of the coffee industry. Almost 70% of the coffee used by Starbucks around the world comes from the sixth major producer in the world, Guatemala, a pro-organic producer.
Intellectual property
Starbucks U.S. Brands, LLC, is a Starbucks-owned company that currently holds and owns the property rights to approximately 120 Starbucks Coffee Company patents and trademarks. It is located at 2525 Starbucks Way in Minden, Nevada.
Name
The company is named in part after Starbuck, Captain Ahab's first mate in the book Moby-Dick, as well as a turn-of-the-century mining camp (Starbo or Storbo) on Mount Rainier. According to Howard Schultz's book Pour Your Heart Into It: How Starbucks Built a Company One Cup at a Time, the name of the company was derived from Moby-Dick, although not in as direct a fashion as many assume. Gordon Bowker liked the name "Pequod" (the ship in the novel), but his then creative partner Terry Heckler responded, "No one's going to drink a cup of Pee-quod!" Heckler suggested "Starbo". Brainstorming with these two ideas resulted in the company being named for the Pequods first mate, Starbuck.
International names include:
- Arabic-speaking countries: ??????? (transliteration:
starbaks)Bulgaria: ???????? (transliteration: Starbâks)China, Hong Kong, Macau, Taiwan: ??? Pinyin: xingbakč (? xing means "star", while ?? is a transliteration of "-bucks")Israel: ??????? (transliteration: s?arbaqs)Japan: ??????? (transliteration: sutabakkusu, phonological: staa-bahkss)Russia: ???????? (transliteration: Starbaks)South Korea: ???? (transliteration: seutabeokseu), often used in conjunction with the English nameQuebec, Canada: Café Starbucks CoffeeThailand: ??????????
Logo
Valerie O'Neil, a Starbucks spokeswoman, said that the logo is an image of a "twin-tailed siren" (the siren of Greek mythology).
The logo has been significantly streamlined over the years. In the first version, which gave the impression of an authentic 15th century European woodcut, the Starbucks siren was topless and had a fully visible double fish tail. The image also had a rough visual texture. In the second version, which was used from 1987-92, her breasts were covered by her flowing hair, but her navel was still visible, and the fish tail was cropped slightly. In the current version, used since 1992, her navel and breasts are not visible at all, and only vestiges remain of the fish tails. The original "woodcut" logo can still be seen on the Starbucks store in Seattle's Pike Place Market, and on both the House Blend and Decaf House Blend packaging.
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, but the temporary switch garnered little attention from the media. Starbucks had drawn similar criticism when they reintroduced the vintage logo in 2006.
Parodies and infringements
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 is currently allowed to display the image as an expression of free speech, but he can no longer sell it.
In 2003, Starbucks successfully sued a Shanghai competitor in China for trademark infringement, because that chain used a green-and-white logo with a similar sounding Chinese name.
Also 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, commonly referred to as "bucks." After facing criticism, Starbucks dropped its demand after HaidaBucks dropped "coffee house" from its name.
In 2005 Starbucks lost a trademark infringement case against a smaller coffee vendor in South Korea that operates coffee stations under the name and style 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 the Seattle-based retailer's claim that the logo of Starpreya is too similar to the famous Starbucks logo.
In 2008, Starbucks disputed the copyright application for Seattle’s Rat City Rollergirls logo after the paperwork was filed with the U.S. Patent and Trademark Office. The corporation claimed the roller derby league’s logo, by Port Orchard, Washington artist Krysztof Nemeth, was too similar to Starbucks’. 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.
Environmental record
In 1999, Starbucks started "Grounds for your Garden" to make their business more environment friendly. "Grounds for your Garden" is a year round program that gives leftover coffee grounds to anyone requesting it for composting. Although not all stores and regions participate, customers can request and rally their local Starbucks 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 1.8 million pounds.The U.S. Food and Drug Administration granted the first-ever approval to use recycled content in food packaging for Starbucks coffee cups. In 2005 Starbucks received the National Recycling Coalition Recycling Works Award. In 2008, Starbucks was ranked #15 on the U.S. Environmental Protection Agency's list of Top 25 Green Power Partners for purchases of renewable energy.
Starbucks has also received criticism from environmentalists. "Dr. Allen Hershkowitz, a senior scientist at the Natural Resources Defense Council, says that Starbucks claimed they were using only 10 percent recycled material partly because the recycled material costs more." In October 2008, The UK newspaper The Sun reported that Starbucks was wasting 23.4 million litres of water a day by leaving a tap constantly running for rinsing utensils in a 'dipper well' in each of its stores worldwide.
Criticism and controversy
Several activist groups maintain websites criticizing the company's fair-trade policies, labor relations, and environmental impact, and hold it as a prime example of U.S. cultural and economic imperialism. Several Starbucks locations were vandalized during the WTO meeting held in Seattle in late 1999.
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".
Anti-competitive tactics
Some of the methods Starbucks has used to expand and maintain their dominant market position include 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. 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.
Labor disputes
Starbucks workers throughout seven different stores have joined the Industrial Workers of the World (IWW) as the Starbucks Workers Union since 2004.
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. 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. 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, to protest the firing of five Starbucks Workers Union organizers by Starbucks and to demand their reinstatement.
Some Starbucks baristas in Canada, Australia and New Zealand, and the United States 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 IUOE. Starbucks admitted no wrongdoing in the settlement.
A Starbucks strike occurred in Auckland, New Zealand, on November 23, 2005. 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.
According to Starbucks Chairman Howard Schulz, "If they had faith in me and my motives, they wouldn't need a union." According to The Seattle Times, "The International Union of Operating Engineers Local 286 had trouble with Starbucks at its Kent roasting plant, where the union no longer represents workers".
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 just filed another suit with regards to the tipping policy. Massachusetts law also states that managers may not get a cut of tips. A similar lawsuit was also filed in Minnesota on March 27, 2008.
Coffee bean market
In 2000, the company introduced a line of fair trade products.
Of the approximately 136,000 tonnes (300 million pounds) of coffee Starbucks purchased in 2006, about 6 percent was certified as fair trade.
According to Starbucks, they purchased 2,180 tonnes (4.8 million pounds) of Certified Fair Trade coffee in fiscal year 2004 and 5,220 tonnes (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, the only 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 by saying:
Groups such as Global Exchange are calling for Starbucks to further increase its sales of fair trade coffees. Fair trade certification can cost US$2,500 to US$10,000, based on the size of the producer group and length of time the inspections take, and many growers are unwilling or unable to pay for certification.
Beyond Fair Trade Certification, Starbucks argues that it pays above market prices for all of its coffee. According to the company, in 2004 it paid on average $1.42 per pound ($2.64kg) for high-quality coffee beans. This is in comparison to commodity prices which were as low as $0.50–$0.60 in 2003–2004.
Ethos water controversy
Ethos, a brand of bottled water acquired by Starbucks in 2005, is sold at locations throughout North America. Ethos bottles feature prominent labeling stating "helping children get clean water", referring to the fact that $.05 from each $1.80 bottle sold ($.10 per unit in Canada) is used to fund clean water projects in under-developed areas. Although sales of Ethos water have raised over $6,200,000 for clean water efforts, the brand is not 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 Starbucks brand and the vast majority of the sale price (97.2%) does not support clean-water projects. 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. Starbucks has since redesigned the American version of the Ethos water bottles, stating the amount of money donated per bottle in the description.
Brighton store opens in breach of planning regulations
In May 2008, a branch of Starbucks was completed in Kemptown on St. James's Street, Brighton, England, despite having being refused permission by the local planning authority, Brighton and Hove City Council. They claimed there were too many coffee shops already present on the street. Starbucks has appealed the decision, with Brighton and Hove council monitoring the situation.
Brighton & Hove City Council have served Starbucks with an enforcement notice (which they have appealed) to remove all tables and chairs from the premises in order to comply with planning regulations and operate as an A1 retail shop, rather than an A3 coffee shop/restaurant, for which they have no planning permission. The deadline of the enforcement is 20 February 2009.
Alleged relationship with the Israeli military
There have been calls for boycott of Starbucks stores and products because it is alleged that Starbucks sends part of its profits to the Israeli military. It has been long alleged that Schultz is "an active Zionist" and 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." In response to these allegations Starbucks issued a statement saying “Neither Chairman Howard Schultz nor Starbucks fund or support the Israeli Army. Starbucks is a non-political organization and does not support individual political causes.” Starbucks has been a regular target of activists protesting against the Israeli intervention in Gaza. Starbucks was forced to close a store in Beirut, Lebanon because of demonstrators shouting anti-Israel slogans and causing customers to flee. Protesters in Beirut told the Associated Press that they targeted Starbucks because they claim Chairman and CEO Howard Schultz donates money to the Israeli military. They 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. Starbucks responded by saying "Rumors that Starbucks Coffee Company and its management support Israel are unequivocally false. ... Starbucks is a nonpolitical organization and does not support political causes. Further, political preferences of a Starbucks partner [employee] at any level have absolutely no bearing on Starbucks company policies."
Violence against Starbucks in the United Kingdom
On January 12, 2009, a Starbucks in Whitechapel Road in London was the target of vandalism by pro-Palestinian demonstrators broke windows and reportedly ripped out fittings and equipment after clashes with riot police. Later the same day, after midnight, a suspected makeshift firebomb was hurled into the premises, causing further damage.
On January 17, 2009, at an anti-Israel protest held by the Stop the War Coalition in Trafalgar Square in central London, British Rapper Lowkey stated, with regard to Starbucks, that: "You say you know about the Zionist lobby but you put money in their pockets every time you’re buying their coffee." After the rally, two groups of people, many wearing scarves over their faces, smashed and looted two Starbucks on Piccadilly and Shaftesbury Avenue. Although the Starbucks stores had requested greater police protection following the violence against a Starbucks the previous week, Scotland Yard stated it could "not stop thugs hell-bent on causing damage."
Accusations by Sheikh Yusuf al-Qaradawi
In a sermon delivered by Muslim cleric Sheikh Yusuf al-Qaradawi, which aired on Al Jazeera TV on January 9, 2009 (as translated by MEMRI), Al-Qaradhawi accused Starbucks of supporting Israeli education and the Israeli Army and called for a boycott of the company and other western chains. Al-Qaradawi has previously called for a similar boycott of all US products with limited success. Starbucks has not commented directly on Al-Qaradawi's accusations, but has in the past, denied supporting Israel or any other political action.
Other ventures
Starbucks entered the music industry in 1999 with the acquisition of Hear Music, and the film industry in 2006 with the creation of Starbucks Entertainment. Starbucks Entertainment was one of the producers of the 2006 film Akeelah and the Bee. Retail stores heavily advertised the film before its release.
Hear Music is the brand name of Starbucks' retail music concept. Hear Music began as a catalog company in 1990 and was purchased by Starbucks in 1999. Nearly three years later, in 2002, they produced a Starbucks opera album, featuring artists such as Luciano Pavarotti.
Partnership with Apple
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 similar music that appeared in Starbucks stores. In September 2007 Apple announced that there would be wireless communication between Apple and Starbucks. Through the AT&T Wi-Fi, a paywall is opened up to allow any individual connecting to AT&T wifi access to the iTunes Store (regardless of whether he or she is an AT&T subscriber). The partnership is primarily targeted at iPhone, iPod Touch, and Macbook users (although anyone with access to iTunes can take advantage of it). In addition, the iTunes Store will automatically detect the current and last 10 songs playing in a Starbucks and offer users connected to the store's wireless network the opportunity to download the tracks. This feature has been rolled out in Seattle, New York City, and the San Francisco Bay Area, and will slowly be offered in limited markets during 2007–2008. During the fall of 2007, Starbucks also began to sell digital downloads of certain albums through iTunes. The buyer would buy the download at Starbucks, and enter the code on the download card at the iTunes Store, and then the entire album would immediately start downloading. From October 2 to November 7, 2007, Starbucks gave away 37 different songs for free download through iTunes as part of the "Song of the Day" promotion. Each day, baristas would give out download cards for a particular song which could be redeemed on iTunes. Currently, every Tuesday, a new "Pick of the Week" download card is available at Starbucks for a free song download, similar to its previous "Song of the Day."
See also
Further reading
- Michelli, Joseph A. (2006). The Starbucks experience: 5 principles for turning ordinary into extraordinary, 208 pages. ISBN 0-07-147784-5.
- Schultz, Howard and Dori Jones Yang. (1997). Pour Your Heart Into It: How Starbucks Built A Company One Cup At A Time, 350 pages. ISBN 0-7868-6315-3.
- Behar, Howard with Janet Goldstein. (2007). It's Not About The Coffee: Leadership Principles from a Life at Starbucks, 208 pages. ISBN 1591841925.
- Clark, Taylor. (2007). Starbucked: A Double Tall Tale of Caffeine, Commerce and Culture. 336 pages. ISBN 031601348X.
External links
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