A franchise is a dream come true for any investor in the food industry, so does Starbucks use this business model? Are Starbucks franchises? Read on to find out.
Starbucks stores are not franchises. If you’re looking for a way to own a Starbucks store, you can start a licensed one instead. My friends and I had a small coffee shop at our joint mall space as an investment. Unfortunately, its operating costs were higher than expected, so we turned it into a Starbucks-licensed store. Although a franchise was a better idea, we wanted a partner that shared our goal to sell premium coffee. The store is now more cost-effective and manageable because of support from Starbucks. So, if you want a solid investment, these stores are a sound plan, but you must exercise due diligence.
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Starbucks avoids franchises because this structure makes it difficult to uphold its culture and values down to a tee. A franchise means you can independently run a store under a reputable brand for a specified cut on its profits. Large businesses like McDonald’s have adapted this approach because they can expand faster at a lower cost. Despite these perks, Starbucks still prefers to own all its US stores and oversee operations.
Howard Schultz, the founder of Starbucks, once expressed a somewhat fanatic desire to have control over Starbucks stores in his book, Pour Your Heart Into It. He likened franchisees to middlemen who would lose touch with the company’s principles as he took pride in the little things that make it unique. For instance, Starbucks trains its baristas on how to make its signature coffee and curate a memorable experience for its customers. He was skeptical that franchisees could add such value.
Schultz’s approach means Starbucks controls the menu, design, training, equipment, food, and promotions in all licensed stores to maintain the quality of its products and services. Interestingly, this stance worked because Starbucks has more than 12,000 stores in the US and counting. Around 41% of these stores are licensed, but people assume they are franchises.
If you want a Starbucks license, fill out an application form on its Branded Solutions webpage to get started. You have to register an account first to proceed. Starbucks requires you to explain what makes you a qualified licensed store owner. The application will also ask you to highlight a proposed location, the type of business you manage, and the products you want to offer, among other details.
Unfortunately, Starbucks hasn’t released the criteria it uses to determine which applicant deserves a license, but a location with high traffic, like an airport, is a plus. Starbucks will contact you if your application is successful. Lucky applicants need liquid assets worth $300,000 to $700,000, which includes a licensing fee, to run a new store. The best part is Starbucks will support your business with equipment installation, store design, and staff training.
Are all Starbucks corporate-owned?
Starbucks owns all its stores in the US, but it has licensed around half of them to interested parties. However, some stores outside the country, like Starbucks in China, are franchises.
What type of business is Starbucks considered?
Starbucks is a corporation that retails coffee, drinks, and food, while it licenses some of its stores to make money.
Is Starbucks a privately owned business?
No. In 1992, Starbucks lost its private-company status when it went public and sold its shares for the first time on the US stock market.
Kai Jordan worked as a Certified Nutrition Specialist and now a food critic whose main objective is to provide consumers with as much information as they need to make the right choices concerning foods and drinks. Jordan is passionate about helping the public reach their health-related goals but also keen on reviewing foods and drinks offered by some of the famous restaurants the likes of Starbucks.
Kai has therefore created well-researched and comprehensive excerpts regarding the services and products offered by the giant restaurant chain. And which can be retrieved from Starbmag.com, apart from talking writing, and dealing with food Kai loves also to Kayak. You can read more about me on the about us page.