How To Start Your Own Starbucks Franchise – No matter where you turn or shop, there’s a Starbucks nearby. Starbucks is considered to be the largest coffee chain in the world with more than 32,646 stores in 2020 and still growing. What started as a small coffee shop in Seattle has grown into a multi-national corporation with 70 million loyal customers, young and old.
How much does it cost to open a Starbucks franchise? The bad news is that you still can’t franchise this concept. Why? Later, Starbucks CEO Howard Schultz once said in 2003, “If we were franchisees, it would be difficult to provide customers with the level of product sensitivity and knowledge required to create Starbucks value.” In other words, Starbucks wants to protect and maintain the quality of coffee and service. They believe consistency and quality may be lost with the franchise model.
How To Start Your Own Starbucks Franchise
But don’t click Close on the table yet. There’s always a way you can get involved in managing Starbucks store operations. Let me explain.
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You can still open a so-called “licensed” Starbucks store. Remember that a license is not the same as owning a right. It’s like renting out the brand, and the companies look in return. You have to pay the license fee rather than the license fee. A franchised Starbucks costs approximately $315,000. You will need $700,000 in liquid assets to consider this opportunity. Take our franchise quiz to find out if an alternative coffee brand is right for you.
To know more about Licensing a Starbucks store, I am providing you the details below. Grab your coffee any way you like and let’s get started.
As mentioned above, a Starbucks store license carries significant fees and benefits. Below is an estimated breakdown of what these charges are:
To better understand this term, liquid assets refer to cash on hand. This is money that you can use easily and conveniently. Cash in a savings account or stocks can be considered an example of a liquid asset.
How To Start Your Own Starbucks Coffee Franchise
Again, Starbucks doesn’t allow franchise stores, so it’s best to talk to Starbucks directly if you’re interested in licensing their coffee shop. You will need to fill out a form and they will need to assess your eligibility before accepting you as a licensed operator of their brand.
Note that even if you are not a franchisee, the investment is at the same level as comparable concepts such as McDonald’s, which require $1 – $2.2. On average, millions of dollars are added to the franchise.
Why should entrepreneurs decide to invest in a franchised Starbucks store? The truth is, you can still make money using a global brand look, menu and 70 million strong customers. If you can find a location like an airport or a shopping mall, you can increase brand recognition to sell a lot of coffee cups.
Starbucks’ average sales over the past five years were $23.69 billion annually. That’s why they are the king of all coffees. Despite the decline in sales in 2020 due to the pandemic, figures from the past five years show how sales continue to grow. We expect this growth trend to continue as the company grows deeper into key international markets such as China.
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One of the catalysts for their growth is the mobile app, which now accounts for 24% of sales in the US. This company’s rate increased by only 3% in 2016. The mobile app allows customers to earn rewards when you order drinks or food. These rewards, or stars called within the app, can be exchanged for free menu items, similar to a punch card loyalty program.
As someone who has downloaded the Starbucks app on their phone, I can attest that the app is a powerful marketing tool for the company. I get push notifications on my phone through an app that give me coupons or tell me about specials or new drinks. This gentle reminder has prompted me more than once to drive around my neighborhood to find a black Wendy’s grill.
Costa Coffee and Dunkin’ Donuts are considered competitors of Starbucks, but their average annual sales (Costa Coffee: £1.34 billion; Dunkin’ Donuts: $1.37 billion) are much lower than Starbucks’. However, they may be viable alternatives to evaluate if you want to enter the coffee business.
Starbucks main headquarters are located in Seattle, where the company was founded. Although their largest branch is in Chicago with over five floors of baked goods, a cocktail bar and a rooftop deck. Starbucks has more than 349,000 full-time employees worldwide.
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The name of the cafe comes from the first mate in Herman Melville’s book “Moby Dick”. Although known for selling coffee, Starbucks also carries Evolution Fresh, bottled juices and Ethos bottled water. Other notable Starbucks-owned businesses include Seattle’s Best Coffee and Tazo, a tea company.
According to Statista report, Starbucks sales reached $19.16 billion in 2020. According to an SEC filing from 2010, the company earned a gross margin of $108,000 per store. Considering that Starbucks currently has 32,646 locations, you can estimate an annual gross margin of over $3.5 billion per year. That’s a huge amount of profit.
There is even speculation that Starbucks has increased profits since 2010. This profit margin is likely to increase due to the power of volume and lower prices, distribution and stock buybacks.
Starbucks experienced a 27.7% drop in 2020 from the previous year, but this was due to the pandemic. It should also be noted that Starbucks sells other items besides drinks. They also sell food items like baked goods. Beverage products earned about $14.34 billion, while food products reached $3.8 billion in 2020.
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We know you can’t franchise Starbucks. But you can get a license somewhere. Here are some of the benefits of going this route.
According to Business News PH, when you are granted a Starbucks operating license, you can customize the coffee outlet according to your style. Unlike other franchises where the company will definitely give you the layout or design of the store with Starbucks, you can use some designs to suit the local taste.
But that doesn’t mean you can be completely creative about design. You must base your outlet on one of the 18 design studios offered by Starbucks. But it’s still better than the uniform look you’ll find in other business owners.
In addition to personalized store design, you’ll also get Starbucks’ exclusive packing program. Not only do you get signature drinks from them, but you also get access to their menu. These croissants, cheesecakes, breads, cookies, and tarts, you want in your cafe.
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You can also find Starbucks beans, so you don’t have to worry about where to get your coffee supplies for sale.
Starbucks won’t leave you once you draw the line. All your concerns will be answered as advice and support will be provided. Working in a Starbucks store before investing in a brand license is also beneficial. This will familiarize you with the day-to-day operations of a retail store.
When you are licensing a Starbucks store, you may be wondering how you will know which coffee machine is best to use or what other equipment is needed. You don’t need to worry about this as they provide you with the equipment that is already approved for use. This helps maintain consistency across your store and other coffee shops operating under that umbrella.
One of the biggest advantages of owning a Starbucks is that you get more oomph than other coffee shops. Store names you are already familiar with. You already have a customer base. The Starbucks aesthetic is already set for you. You’ll also find seasonal promotions like signature coffee lines, merchandise, and pumpkin spice lattes. You will have most stores ready to run without knowing your brand.
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Like any other business, running a Starbucks comes with its challenges. But that’s why we’re here to break it all down for you, so if you decide to get a Starbucks license, you’ll be well aware of the hurdles you’ll have to overcome. Here are some things you should know:
We’ve already mentioned how much it costs to get a Starbucks license. In addition to the fee, you should consider the liquid assets that Starbucks considers an acceptable amount to approve your application.
No wonder Starbucks is considered expensive by many. A tall iced coffee at Starbucks costs $2.25 (12 ounces) while a small (16 ounces) at Dunkin’ Donuts costs $1.99. Many factors come into play as to why Starbucks coffee is so expensive. You are the first to take into account
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