Monday, November 19, 2007

The Starbuck's Empire: Coffee, Cash, Coffee, Cash, Coffee, Cash!

Did you know that more people would give up sex before they'd give up coffee? For me there is sometimes nothing better than an Grade Drip, Double Cupped, Sleeved, No Room, Strongest friggin' stuff you got! That's just one of the delicious highlights from a largely positive, but unauthorized, biography of the coffee behemoth Starbucks as it appeared in Fast Company magazine and the culture that it has created in just 15 years. The amount of money this corporate giant makes is just incredible. When did we settle for a $2.00 cup of coffee?

When I was back East recently it wasn't Starbuck's that was all over the place. It was Dunkin' Donuts! On every other corner there was a store. On billboards all over the place there was the big head and loud mouthed Rachael Ray promoting her love for their coffee and donuts. Friends of mine had Dunkin' Donuts coffe in their homes thinking it was the best stuff on earth. I think it tastes like water. In my town, recently built right next door to the Dunkin' Donuts was my favorite coffee place...Starbuck's. There are only two in the Albany, New York area but the big boys are coming. The competition for the best cup of coffee is on with McDonald's, Peets, Coffee Beanery, The Coffee Bean and Seattle's Best in the running.

But Starbuck's is the king of them all. Check out these fact's from the book...

Starbucks's closest competitor in the coffeehouse market, Caribou Coffee, is just one-twenty-fifth its size. Every 10 weeks, Starbucks opens as many stores as the total number of Caribou outlets.

Starbucks has had 14 straight years with at least 5% same-store sales growth.

Contrary to popular opinion, Starbucks increases sales at rival nearby coffeehouses. For example, when it blitzed Omaha with six stores, coffee sales at local joints went up as much as 25%, and more new ones opened shop.

According to Starbucks, the company pays more for insurance for its employees ($200 million) than it does for coffee beans, yet only 42% of its 125,000-plus workforce has company health insurance--a lower percentage than Wal-Mart (46%).

The average customer spends $4.05 per visit for coffee; the average fast-food-restaurant visitor spends $4.34 for an entire meal.

For a cup that costs $3.40, at least 40 cents is profit. When Starbucks bumped the 8-ounce cup off the menu, the 10-ounce "tall" (the new small) increased profits by 25 cents per cup for only 2 cents of added product.

So you see, we are being eaten up by the new coffee culture. And did you know that 80% of Starbucks sales come from customers who visit their shops an average of 18 times a month? Heck, that's nothing. I do that in a below-average week. Thank God they offer 50-cent refills. By the way, the Starbuck's Gift Cards are a great idea. Remember that about me on Christmas!