Starbucks Corporation is an American multinational chain of coffeehouses and roastery reserves headquartered in Seattle, Washington. It was founded in 1971 by Jerry Baldwin, Zev Siegl, and Gordon Bowker at Seattle's Pike Place Market initially as a coffee bean wholesaler. Starbucks was converted into a coffee shop serving espresso-based drinks under the ownership of Howard Schultz, who was chief executive officer from 1986 to 2000 and led the aggressive expansion of the franchise across the West Coast of the United States.
As of November 2022, the company had 35,711 stores in 80 countries, 15,873 of which were located in the United States. Of Starbucks' U.S.-based stores, over 8,900 are company-operated, while the remainder are licensed. It is the world's largest coffeehouse chain. The company is ranked 120th on the Fortune 500 and 303rd on the Forbes Global 2000, as of 2022.
The rise of the second wave of coffee culture is generally attributed to Starbucks, which introduced a wider variety of coffee experiences. Starbucks serves hot and cold drinks, whole-bean coffee, micro-ground instant coffee, espresso, caffe latte, full and loose-leaf teas, juices, Frappuccino beverages, pastries, and snacks. Some offerings are seasonal or specific to the locality of the store. Depending on the country, most locations provide free Wi-Fi Internet access. The company has been subject to multiple controversies related to its business practices. Conversely, its franchise has commanded substantial brand loyalty, market share, and company value.
Starbucks originally opened in Seattle, Washington, on March 30, 1971. By selling coffee beans and related equipment, Starbucks became a local coffee bean retailer for the first ten years in Seattle. It was founded by business partners Jerry Baldwin, Zev Siegl and Gordon Bowker who first met as students at the University of San Francisco. The trio were inspired to sell high-quality coffee beans and equipment by coffee roasting entrepreneur Alfred Peet. Bowker recalls that a business partner of his, Terry Heckler, thought words beginning with the letters "st" were powerful, leading the founders to create a list of words beginning with "st", hoping to find a brand name. They chose "Starbo", a misreading of the mining town Storbo in the Cascade Range named after Peter Storbo, founder and president of the Mount Rainier Mining Company. From there, the group remembered "Starbuck", the name of the chief mate in the book Moby-Dick. Bowker said, "Moby-Dick didn't have anything to do with Starbucks directly; it was only coincidental that the sound seemed to make sense."
The first Starbucks store was located in Seattle, at 2000 Western Avenue, from 1971 to 1976. The café was later moved to 1912 Pike Place. During this time, Starbucks stores sold just coffee beans and not drinks. In its first two years of operation, Starbucks purchased green coffee beans from Peet's Coffee & Tea. In 1973, Alfred Peet stopped supplying Starbucks and helped train their new Roastmaster, Jim Reynolds.
The first Starbucks to sell brewed coffee opened in 1982. Later that year, the company hired Howard Schultz, who was behind the push to begin selling brewed coffee. The company opened its first espresso bar in 1984.
That year, the original owners of Starbucks, led by Jerry Baldwin, purchased Peet's Coffee. By 1986, the company was operating six stores in Seattle and had begun to sell espresso coffee.
Since the founders did not wish to expand too far from their original goal of that centered upon selling arabica coffee beans, Schultz left the company in 1985 to found Il Giornale, a cafe inspired by the coffee bars he observed in Milan, Italy. Starbucks was the first investor in this venture, which used its beans in its beverages. In 1987, the original owners sold the Starbucks chain to Schultz, their former director of marketing, who rebranded his Il Giornale coffee outlets as Starbucks and began to expand the company. Also in 1987, Starbucks opened its first locations outside of Seattle, in Waterfront Station in Vancouver, British Columbia, and in Chicago, Illinois.
By 1989, there were 46 Starbucks stores located across the Pacific Northwest and Midwest, and the company was roasting more than 2,000,000 pounds (907,185 kg) of coffee annually.
In June 1992, at the time of its initial public offering, Starbucks (ticker symbol: SBUX) had 140 outlets, with revenue of US$73.5 million, up from US$1.3 million in 1987. The company's market value was US$271 million by this time. The 12% portion of the company that was sold raised around US$25 million for the company, which enabled it to double its number of stores over the next two years. In 1994, Starbucks acquired The Coffee Connection, gaining the rights to use, make, market, and sell the "Frappuccino" beverage. The beverage was introduced under the Starbucks name in 1995.
In 1999, Starbucks experimented by opening eateries in the San Francisco Bay Area, under the Circadia restaurant brand. At the same time, Starbucks converted its Seattle Circadia restaurant into a Café Starbucks. The same year, Starbucks acquired Pasqua Coffee—a San Francisco-based retail coffee chain that had almost 60 locations in San Francisco, Los Angeles, and New York City.
In April 2003, Starbucks acquired Seattle's Best Coffee and Torrefazione Italia from AFC Enterprises for US$72 million. The deal only gained 150 stores for Starbucks, but according to the Seattle Post-Intelligencer, the wholesale business was more significant. By June 2003, Starbucks Japan had 466 stores and would add another 70 to 75 in the 2003 financial year. Its president, Yuji Tsunoda said it would install ovens in all stores to improve its food offerings.
From 2005 to 2007, Howard Behar served as the president of Starbucks North America. In September 2006, rival Diedrich Coffee announced that it would sell most of its company-owned retail stores to Starbucks, including most locations of Oregon-based Coffee People, escalating regional coffee wars. Starbucks converted the Diedrich Coffee and Coffee People locations to Starbucks. The Coffee People locations at Portland International Airport were excluded from the sale.
In early 2008, Starbucks started a community website, My Starbucks Idea, designed to collect suggestions and feedback from customers. Other users could comment and vote on suggestions. Journalist Jack Schofield noted that "My Starbucks seems to be all sweetness and light at the moment, which I don't think is possible without quite a lot of censorship." In March 2008, Starbucks acquired Coffee Equipment Company, which was the manufacturer of the Clover Brewing System. It began testing the "fresh-pressed" coffee system at several Starbucks locations in Seattle, California, New York, and Boston.
In July 2008, during the Great Recession, Starbucks announced it was closing 600 underperforming company-owned stores and cutting U.S. expansion plans amid growing economic uncertainty. On July 29, 2008, Starbucks also cut almost 1,000 non-retail jobs as part of its bid to re-energize the brand and boost its profit. Of the new cuts, 550 of the positions were layoffs and the rest were unfilled jobs. Additionally in July 2008, Starbucks announced that it would close 61 of its 84 stores in Australia in the following month. Nick Wailes, an expert in strategic management of the University of Sydney, said that "Starbucks failed to truly understand Australia's café culture."
In January 2009, Starbucks announced the closure of an additional 300 underperforming stores and the elimination of 7,000 positions. CEO Howard Schultz also announced that he had received board approval to reduce his salary. Altogether, from February 2008 to January 2009, Starbucks terminated an estimated 18,400 U.S. jobs and began closing 977 stores worldwide. In August 2009, Ahold announced closures and rebranding for 43 of its licensed store Starbucks kiosks for their US-based Stop & Shop and Giant supermarkets.
In 2012, Starbucks had annual Frappuccino sales of over US$2 billion. In August 2012, the largest Starbucks in the US opened at the University of Alabama's Ferguson Centre. On June 25, 2013, Starbucks began to post calorie counts on menus for drinks and pastries in all of its U.S. stores. In July 2013, more than 10% of in-store purchases were made on customers' mobile devices via the Starbucks app.