Starbucks in North America

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Starbucks was founded in 1971 by Gordon Bowker, Jerry Baldwin, and Zev Siegl in Seattle. The

company initially offered its consumers fresh-roasted coffee beans, tea and spices. In 1983, New

York native, Howard Schultz, moved to Seattle to develop Starbucks by introducing Italian coffee

culture to the company and the rest of the world. Starbucks took a page from the European cafe

As the world’s largest coffeehouse chain, Starbucks now has an extensive global presence with 38,587

stores worldwide, including 16,466 locations in the United States. Not only does Starbucks offer tea,

coffee, and pastries, but sells other merchandise, such as mugs and instant coffee. As the mission is:

we nurture the limitless possibilities of human connection,”

Starbucks aims to create a “third place”, which is a space of respect and dignity for consumers. They

have built a strong consumer base, which is evidenced by a 13% year-over-year increase in active

users of the Starbucks Rewards loyalty program. Additionally, it took a significant measure to

achieve sustainability by announcing the acceptance of reusable cups in all North American stores.

Reinvention with Two Pumps Plan, to enhance operational success further.

Starbucks in North America

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Starbucks has set its goals and objectives to build a successful future. Starbucks aims to:

GAAP earnings per share by 15-20%, and revenue by 10-12% annually through fiscal 2025.

demographics indicate the importance of Starbucks tailoring its marketing efforts and

product offerings to cater to the preferences and lifestyles of the older age groups.

total population in 2025 (Worldometers, 2022). The increasing urbanization indicates that

Starbucks should focus its operational efforts mostly on the stores in urban areas and

potentially increase the frequency of visits.

decreased from 8.21% in 2020 to 3.79% in 2022 (O’Neill, 2024). This significant reduction

in the unemployment rate means that more people have found jobs, directly enhancing North

could lead to an increase in customer numbers, especially the consumption of daily essential

products like coffee might rise as a result. Concurrently, Starbucks will have the opportunity

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the potential for sustained growth. A robust economic environment for Starbucks will aid in

long-term planning and investment decisions.

including those governing food and beverage preparation, labour, health, and other safety

aspects (Le, 2023a). It needs to closely monitor the potential amendments to laws and regula-

tions across different regions to ensure compliance and adapt its operations accordingly.

a luxury indulgence, offering both purpose and pleasure to enthusiasts. This shift has led to a

engaging web content, and social media channels to increase brand awareness and boost sales.

and self-service kiosks, have been developed to automate routine tasks (Craver, 2023).

Starbucks should leverage these technologies to foster innovation in its service, thus

enhancing customer experience and loyalty. This approach enables Starbucks to increase

differentiation in the market and increase sales.

supply shortages, exacerbated by adverse weather conditions in key coffee-producing regions

(Le, 2023b). Increased demand from countries like Russia, Germany, and China strains coffee

Starbucks in North America

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As the world’s largest coffeehouse chain, Starbucks possesses strong market power and

brand recognition in the North American market. This is not easily replaceable or threatened

by new entrants. New entrants require substantial capital investment, infrastructure and ex-

tensive networks to establish a large operational scale and brand recognition comparable to

Starbucks. Also, Starbucks has already established long-term partnerships with cost-effective

and reputable suppliers, intensifying the challenges for new entrants. However, the coffee

In beverages, Starbucks offers diverse products including coffee, tea, and frappuccinos, with

extensive customization options, making its products less substitutable. However, in its food

menu, Starbucks only offers pastries and sandwiches, which share product assortments similar

to those of rivals. Lacking a unique selling proposition may facilitate easy switching for buyers.

The proliferation of coffee shops has allowed suppliers to easily distribute their products to

businesses beyond Starbucks. Also, the rising demand for coffee beans, coupled with supply

shortages, could enhance suppliers’ bargaining power. Still, Starbucks’s large scale enables it to

and the trend towards home-made beverages, enable customers to switch between different

options easily. Starbucks should mitigate this power by continuing to maintain its strong

customer loyalty base through superior product and service quality.

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towards superior coffee and aesthetic in-store experiences. Starbucks must persist in delivering

value through innovation and superb customer experiences to retain and attract customers.

first-name basis to create an intimate and personalized experience, thus increasing customer

engagement and improving friendly customer experiences (Lindsey, 2023). As well, all

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Apple Pay (Curry, 2024). Starbucks has always promoted its app and dedicated loyalty

program, along with the in-app scan and pay features. Moreover, statistics show that 25% of

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(IBIS World, n.d.). Incremental growth in the number of stores and limited revenue growth suggests

an impending market saturation. Also, with limited innovation in coffee and tea products, many

hinder improving their performance. Plus, beverage and coffee products are highly imitable, and