Starbucks Business Plan

1. Introduction

We choose to be a franchisee of Starbucks for Franchise and Licensing’s group assignment. This group assignment is designed for students to present a comprehensive business plan proposal to buy into an existing franchise. This means that students seek to become franchisees. We were invited to showcase of Carnival franchise which held in week 13 (2-4 May 2016). The Franchise Start-Up Plan Event includes the development and presentation of various aspects of a plan to form a business. The event provides an opportunity for us to develop and demonstrate mastery of essential knowledge and skills as we apply the analysis of a business opportunity, the development of a financial plan.

Starbucks is one of the largest Coffee House Company in the world that was established in 1971. It gives a pleasant coffee-house atmosphere with providing amazing layout and Wi-FI. Starbucks aim is to provide high quality of coffee to its consumer and achieve product innovation, retail expansion and provide service quality for long term.

First coffee store were open in Seattle, Washington. It expands its headquarters in Seattle and builds a new roasting plant. In 1990s Starbucks opens about 60 retails shops in United Kingdom. At the end of 2000s Starbucks manage to have 3500 branches. According to national coffee association, USA 49% of American age 18 and more drink coffee beverage every day. Coffee industry was in peak of its success at the end of 1990s.

Starbucks are now quite famous in Malaysia. They seem to have lots of loyal customers because Starbuck serves their customers with quality services and delicious meals besides its main menu which is coffee. For Malaysia, Starbucks is under Berjaya Group Coffee Company Sdn Bhd. This business proposal will explain more about Starbucks quality and strategy used to run a franchise of Starbuck.

2.0 Executive summary

Starbucks Coffee started its global expansion from year 1996 opening its first store outside of North America in Japan. As at year 2009, the company has total number of 16, 635 stores globally. Operating globally made Starbucks Coffee Company to record a total net revenues of USD 9.8 billion for its business sales and operation. One of the Starbucks Coffee Company global expansion market is Malaysia Food and Beverages Industry. Business model of Starbucks are includes, key partners, key activities, key resources, cost structure, revenue stream, value preposition, customer relationship, channels and customer segments.

2.1 Key Partners

Starbucks has success in the international market due to its partnerships. The key partners of the Starbucks such as Abyssinian Development Corporation (ADC) since 2011, The American Red Cross since 2001, The Association for the Advancement of Mexican Americans (AAMA) since 2012, The Association of Postconsumer Plastic Recyclers (APR) since 2010. BSR’s global network since 1994, Calvert Foundation since 2008, Catalyst since 2013, Business for Innovative Climate and Energy Policy (BICEP) since 2008, Conservation International since 1998, DonorsChoose.org since 2011, The Foodservice Packaging Institute, Inc. (FPI) since 2011, Global Green USA since 2007, The Global Social Compliance Programme since 2011, Incofin Investment Management, Fairtrade International and Grameen Foundation since 2012, The International Youth Foundation (IYF) since 2008, Los Angeles Urban League since 2011, Mercy Corps since 2003, Multicultural Foodservice and Hospitality Alliance (MFHA)  since 2013, National Association for the Advancement of Colored People (NAACP) since 2006, National Urban League (NUL) since 2005, The National Recycling Coalition since 2011, Points of Light since 2008, Product(RED) since 2008, Root Capital since 2004, Save the Children since 2005, Sustainable Food Lab since 2008, The Sustainable Packaging Coalition (SPC) since 2004, UK Youth since 2011, The US Business Leadership Network (USBLN) since 2005, The U.S Green Building Council (USGBC) since 2000, Washington State Recycling Association (WSRA) since 2008, Women in Foodservice Forum(WFF) since 2011 and World Cocoa Foundation since 2003.

2.2 Key Activities

The key activities of the business model of Starbucks are essential for every store that was designed to highlight the quality of all aspects that are important to customer satisfaction and, manage to create a sense of brand loyalty. Starbucks is interested in everything about the customers, which is they keep the following activities such as coffee beans, seasonal products, complementary products and pastry. For the key resources of Starbucks, the financing, human resource, facilities, coffee equipment and accessories, and suppliers play important roles for company success.

2.3 Cost Structure and Revenue Streams

Starbucks is well known in the coffee industry. Starbucks roasts and sells high quality of Arabica coffees and coffee drinks in their outlets (Market Watch, 2013). Besides that, Starbucks also provide food such as sandwich, cakes, and bread in their outlets. In Malaysia, Starbucks’s coffee is a luxury good so it would have elastic of demand. When Starbucks’s coffee is a luxury good, consumer is very sensitive to the price change. The consumer demand will drop drastically when the price of the Starbucks coffee rises because consumer would consume lesser than before or switch to a less costly alternatives (Sloman, Wride, and Garratt, 2012). Starbucks Malaysia has aimed to open 25 to 30 stores a year depending on the macroeconomic situation, with investment ranging from RM800,000 to RM1.6 million per store, depending on size. The company expects at least 30% to 40% to be drive-through outlets as drive-thrus has a big potential of convenience for the future. Currently Starbucks Malaysia has 18 drive-thrus and it is seeing as a potential to success in the future. It gives the Starbucks an opportunity of having another avenue to generate income. With a revenue growth rate of about 20% year-on-year, the company aspires to be able to embed Starbucks into the everyday life of the Malaysian consumers.

2.4 Value Preposition

Starbucks hires people with a sense of commitment to the company and skills to perform their work efficiently. This company is transferring knowledge and passion of employees and partners to every customer in order to improve satisfaction.

2.5 Customer relationship

Starbucks has introduced Starbucks card where customers are now able to enjoy their cup of coffee with just a swipe at anytime and anywhere. Moreover, the Starbucks Card Mobile Application was introduced in 2014, making it the fastest and most convenient way to pay at Starbucks which provides greater convenience to our customers. Besides that, personal attention, song of the month and apps, their quality, customer care website, fast service and the kindness of the barista crew has built customer relationship between Starbucks and their customers.