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Business Operations Business Models

How Does Starbucks Make Money (Business and Revenue Model)

The Starbucks business model

How Does Starbucks Make Money?
Here’s what you should know:
  • What is Starbucks, and how does Starbucks work?
  • How does Starbucks make money?
  • Company Operated Store Revenues (Store Sales)
  • Licensed Store Revenues (Royalty Fees)
  • Other Revenues
  • Starbucks’ Subsidiaries, Acquisitions, and Exits
  • Starbucks’ profit and revenue
  • What is the Starbucks business and revenue model?
  • Starbucks funding and market cap

How does Starbucks make money? Here is a full, in depth, breakdown of their three (3) revenue streams and the different products and services they offer, as well as the Starbucks business model, their profit and revenue, and how Starbucks works.

What is Starbucks, and how does Starbucks work?

Starbucks is an American multinational coffee shop chain available in 80 countries.

Founded in 1971 by Jerry BaldwinZev Siegl, and Gordon Bowker, Starbucks began trading on the NASDAQ on June 26, 1992, under the ticker symbol “SBUX”.

Since that time, Starbucks has grown to more than 33,833 retail locations across 80 countries, making it the largest coffee shop chain in the world.

Some of Starbucks’ competitors include Dunkin’ Donuts and other chain coffee brands.

Starbucks App in Apple App Store | Starbucks Business Model | How Does Starbucks Make Money? | How Does Starbucks Work?
Source: Apple App Store | Starbucks

How does Starbucks make money?

According to page 7 of Starbucks’ 2021 Form 10-K, Starbucks has more than 33,833 coffee shops worldwide that serve over 70 million customers per week.

So how does Starbucks make money from all those stores and customers?

Below is a breakdown of how much money Starbucks makes and its revenue model. Including all revenue streams and how much they charge for their services.

Here are the 3 ways of how Starbucks makes money (in 2022):

Starbucks has a revenue model that makes money in three (3) ways – company operated store revenue, licensed store revenue, and other revenue.

#1. Company Operated Store Revenues (Store Sales)

Starbucks makes the majority of its money through its company operated stores. In fact, $24.6 billion, or 85% of Starbucks’ total revenue came from their company operated stores in 2021.

As noted above, Starbucks has more than 33,833 retail locations worldwide. Of those, 17,133 are company operated – roughly 51% of all their locations.

Starbucks makes money from this through the in store retail sales of items such as beverages, food, packaged coffees, single serve coffees, teas, and other items. Which you can see the in store sales breakdown below.

Starbucks Store Sales:

  • Beverages: $18.2 billion (74% of store sales)
  • Food: $5.16 billion (21% of store sales)
  • Other
Starbucks Store Sales | Starbucks Business Model | How Does Starbucks Make Money? | How Does Starbucks Work?
Source: Starbucks

Note: 85% of Starbucks’ total revenue came from their company operated stores in 2021.

#2. Licensed Store Revenues (Royalty Fees)

The other half (49%) of Starbucks stores are licensed. Which, in 2021, generated $2.68 billion, or 9.2% of Starbucks’ total revenue.

How does Starbucks make money from licensed stores? According to Starbucks, licensed store revenue comes from the sale of products and equipment, royalties, and other fees paid by licensees for using the Starbucks brand.

Starbucks Licensing Fee:

  • $315,000, as per reports

Note: Licensing a business is not the same as franchising a business. Licensee’s only “rent” the Starbucks brand, while a franchisee would own the store.

#3. Other Revenues

Starbucks makes the remaining portion of its money from what they call “other revenues”. Which, collectively, resulted in an additional $1.77 billion of revenue for the company in 2021.

Other revenues, according to page 54 of Starbucks’ 2021 Annual Report, “primarily include royalty revenues, sales of packaged coffee, tea and a variety of ready to drink beverages and single serve coffee and tea products to customers outside of [Starbucks’] company operated and licensed stores.”

Starbucks’ Subsidiaries, Acquisitions, and Exits

To date, the Starbucks Corporation has made a total of 3 acquisitions, 5 investments, 1 lead investment, and 2 successful exits.

Starbucks Acquisitions | Starbucks Business Model | How Does Starbucks Make Money? | How Does Starbucks Work?
Source: Crunchbase | Starbucks

Starbucks’ profit and revenue

In 2021, Starbucks reported $29.06 billion in revenue.

Note: Because the Starbucks Corporation is a publicly traded company, under the Securities Exchange Act of 1934, they must file continuous financial filings with the U.S. Securities and Exchange Commission (SEC). You can find all of Starbucks’ publicly released financial reports, including annual reports, through Starbucks’ investor section on their website.

What is the Starbucks business and revenue model?

Starbucks makes money through a few revenue models that they combine within their company, they are:

  • Transaction based business model
  • Royalty revenue model
  • B2B2C (partnerships) business model
  • Mergers & acquisitions (M&A) business model

Starbucks’ funding and market cap

According to Starbucks’ Crunchbase profile, Starbucks has raised $900 million over 2 rounds and has a market cap of $80.35 billion as of May 2022.