Starbucks-To get you through those all nighters

Starbucks is an American multinational corporation in the food industry.In particular, they provide beverages and bakery products through their coffeehouses and roasters reserves.Starbucks was founded by Jerry Baldwin, Gordon Bowker, and Zev Siegl in 1971 with their first store near Pike Place Market in Seattle,USA.They focused heavily on providing quality coffee and creating special blends using traditional roasting techniques.They intended to be a niche roasters but this soon changed with the entry of their marketing head Howard Schultz.He took notice of the massive demand for fresh brew coffee and the business potential and decided to expand the same. However, the founders had different thoughts which made Schultz leave Starbucks to start Il Giornale. Later in 1987, Schultz bought Starbucks and this marked the start of the metropolitan expansion of the same.Starbucks had their IPO in 1992 at 17$ per share and has since had 6 stock splits implying one stock bought at IPO would equal to 64 shares today.The public issue allowed for global expansion allowing Starbucks to open 15,000 stores in more than 80 countries by 2005.

Starbucks currently trades at 77-82$ with a market cap of 90B$.They are the worlds largest chain of coffee stores and store more varieties of coffee beans than the international seed depository. They have stayed true to their mission of providing fresh and quality brew for people all around the world.Typically the average American spends more than 1300$ a year on Starbucks alone which makes it the food chain with the highest retention rate.The greatest asset is the loyalty of the customers and the accessibility in developed markets.They curate menus for every region specifically to cater to the needs and tastes of their customers.

Starbucks has a median price forecast of 112$ with a high estimate of 130$ and a low estimate of 87$.The median represents a 40% increase from the last trading price.Most analysts have a hold rating for the company.As the world recovers from the pandemic and people have started spending on leisures again, the sales have started to pickup again.It is forecasted that there will be a 25% increase in the sales from 2021 increasing the EPS by 8%.

Starbucks is one of the few companies that have been able to dominate the coffee beverage industry globally.They have been able to create differentiation by creating an upmarket premium coffee brand which is typically linked with quality products and appeal to the higher income groups increasing profit margins.They have been able to create a brand image and a status symbol amongst people which is directly linked to a desirable lifestyle allowing that customer retention.They spend a lot on advertisement and marketing but these costs are justified as the lifetime value of the customer is extremely high making the long term customer acquisition costs low.They have been considered an extremely good brand even by employees as more than 85% of employees work at Starbucks for 7 years or more.But, the same cannot be said by their coffee bean supply chain.They have been accused of child labour and slavery by various institutions time and over.They were made to pay fines of more than 560M$ in Brazil for not following labour laws and deforesting 127M hectares of land.They have been trying to get away from these scandals and cases of misdoings have been reduced significantly in the recent times.Starbucks has been able to keep costs down by having an extremely strong supply chain.They are trying to become the first brand to source 100% of their coffee sustainably and ethically in 2022 for which they were even subsidised by certain governments.Starbucks is a brand that truly caters to the demands of the consumers.They are involved in extremely deep market study and research and every time they enter a new region ,they are able to find the best price points and create demand as well by offering traditional and local flavours.Lastly, their coffeehouses are really welcoming places where most consumers spend more than 1.5 hours and this again allows higher sales volumes increasing profitability.All these signs show that Starbucks is a fundamentally strong company with a unique business model that will provide good returns to all investors.