Starbucks has relied on licensing stores rather than opening corporate-owned outlets in the most recent fiscal quarter. Due to this tactic, the enormous coffee shop has expanded significantly. So, what is a Starbucks-licensed store?
A Starbucks licensed store is simply a store or shop that is partially owned by an individual who has invested in the coffee giant’s business. Starbucks issues licenses under strict guidelines while maintaining complete control over the licensed store.
Having started my own coffee business, I would encourage anyone interested in partnering with Starbucks to think about it. Opening a coffee shop on my own has been a struggle for me, so much so that I closed it and returned to a corporate job. Continue reading this post to learn more about the benefits of licensing a Starbucks location instead and other details to assist you in making the best choice.
What are the advantages of licensing a Starbucks store?
Starbucks has been in business for many years. It began as a small shop in Seattle, Washington in 1971. The company is heavily focused on people and providing the Starbucks experience, which ensures the appreciation of both customers and employees. Starbucks’ founders firmly believe that treating everyone equally and fairly is the key to the company’s success.
Opening a coffee shop under a reputable coffee chain like Starbucks has numerous advantages, which include:
Starbucks is a fantastic partner because it offers to assist with training for all of its partners.
Starbucks values its culture and strives to provide both customers and staff with the Starbucks experience because these are the two pillars of its operations.
To ensure success, they provide licensees with training on how to manage and operate the firm.
To maintain the integrity of the Starbucks brand, the company also trains baristas, team leads, and dishwashers in the proper approach to complete tasks.
When you open a licensed shop under Starbucks as a licensee, you immediately receive positive feedback in terms of people accepting your brand as an original. Starbucks is well-established and has grown and expanded over the decades. It has earned trust and loyalty from people all over the world, distinguishing itself as one of the best coffee chains in the world.
Working with Starbucks increases trust in your brand and service because people associate what you do with the parent company Starbucks. They assume that your brand is already good because Starbucks has already paved the way by building its name, so as a business owner, you do not have to go through the hassle of ensuring that.
Free marketing and publicity
Starbucks has remained relevant through the use of television and social media advertisements, as well as sales and marketing strategies. Starbucks has constantly and frequently marketed itself to stay in the minds of its customers.
Coming in as a licensee partner means you won’t have to struggle to popularize your brand, which will save you money on marketing and advertising and allow you to focus on more important aspects of your business. You will arrive as a well-known brand without having to do anything to publicize it.
Loyal customer base
For any new business, finding a steady supply of devoted customers can be a difficult process. However, while working with Starbucks, you won’t have to worry about this.
As long as you use the Starbucks brand in your establishment, you will be able to simply enter the market and have consumers all the time because of how well-known the company is already.
Expansion to external markets
Growing a new business in different regions will be a simple task. Starbucks has already expanded into new markets around the world, and any association with the brand will make it easier to enter new markets.
In-depth training will also provide you with a better understanding of how to run the store to ensure success and rapid growth.
You can take advantage of the benefits that come with your association with Starbucks as a licensed business owner. If your application is accepted, Starbucks will provide free training, installation of coffee manufacturing equipment, and free shop design. You will save money and lower your overall startup costs as a result.
You may run your firm and concentrate on generating additional revenue using the money you already have. With Starbucks, you also have the assurance of a steady flow of clients, ensuring that your business will always be profitable and generate income. Simply forming the relationship might potentially earn millions of dollars each month if done correctly.
Free store design
Starbucks provides free store designs to its authorized partners. After you complete the application process and qualify, Starbucks visits the shop location and offers assistance in designing the space so that it maintains the true Starbucks experience. They create both interior and outside designs with their devoted clientele in mind.
Installation is free
Starbucks has been gracious enough to its partners to assist with the installation of coffee-making equipment, and they come in to assist with the setup of everything to ensure smooth business operations once the business is launched.
In this licensing store business model, the parent company gains some advantages by selling licenses to other entrepreneurs. The benefits are listed below.
- Royalties provide a steady stream of passive income.
- The ability to easily expand into new areas.
- Cost savings, particularly when opening completely new stores.
- The attraction of new customers.
What are the Financial Requirements and Fees?
Financial stability is one of the requirements for becoming a licensee. To partner with Starbucks, you must have approximately $700,000 in liquid assets. In addition, depending on the circumstances surrounding the business’s launch, you will be required to pay a licensing fee ranging from $50,000 to $315,000.
As a result, you must organize your finances and any other important documents. Starbucks will have complete control over the business’s management, but its growth and success will be entirely your responsibility. You will need to invest a significant amount of money in the business to ensure its long-term success. It is an extremely costly venture, but the rewards are well worth the effort.
What is the average sale and revenue per year of a licensed Starbucks store?
The officially recognized Starbucks stores are quite successful. This is illustrated by Starbucks’ ongoing desire to expand its store base anytime an opportunity arises. In the most recent quarter, Starbucks opened 397 brand-new, authorized stores. According to recent reports, Starbucks generates up to $6.8 billion in revenue.
It’s vital to remember that Starbucks also generates revenue from outside the business, such as licensing and selling coffee to retail establishments, which generates roughly $570 million and brings in about $6.23 billion in total revenue. The figures demonstrate that a licensed Starbucks business generates $204,000 in income each fiscal quarter, which translates to $808,000 per store year.
Does Starbucks license or franchise?
Starbucks licenses. Anyone who completes the application requirements for a licensee is granted a license by Starbucks. Starbucks takes pride in being a family-owned company that values its employees and clients. It hasn’t indicated that it would be open to franchising now or in the future.
Starbucks places a premium on maintaining complete brand control since it only takes one misstep to bring down the coffee juggernaut, which has been in operation for more than 65 years.
Are all Starbucks corporate owned?
No, almost 50% of Starbucks locations are licensed, and the company has stuck with this model, opening 397 additional licensed locations in the most recent fiscal year.
Can you open a Starbucks in your house?
You cannot do so. An excellent location is one of the requirements for opening a shop. You must demonstrate to Starbucks that your location is in a high-traffic area, particularly along busy streets. You must demonstrate that you will have a steady flow of in-house and walking customers.