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Starbucks Corporation
Company typePublic (Nasdaq: SBUX)
ISINUS8552441094 Edit this on Wikidata
IndustryRestaurants
Retail coffee and tea
Retail beverages
Entertainment
FoundedPike Place Market in Seattle, Washington (1971)
FounderZev Siegl, Jerry Baldwin and Gordon Bowker
HeadquartersSeattle, Washington, U.S.
Key people
Howard Schultz, Chairman, President and CEO
Troy Alstead, Chief Financial Officer
Stephen Gillett, Chief Information Officer
ProductsWhole bean coffee
Boxed tea
Made-to-order beverages
Bottled beverages
Baked goods
Merchandise
Frappuccino beverages
Smoothies
Alcoholic Beverages
ServicesCoffee
RevenueIncrease US$9.77 Billion (FY 2009)[1]
Increase US$476 Million (FY 2009)[1]
Increase US$391 Million (FY 2009)[1]
Total assetsDecrease US$5.58 Billion (FY 2009)[2]
Total equityIncrease US$3.05 Billion (FY 2009)[2]
Number of employees
128,898 (2009)[3]
SubsidiariesStarbucks Coffee Company
Tazo Tea Company
Seattle's Best Coffee
Torrefazione Italia
Hear Music
Ethos Water
WebsiteStarbucks.com

Starbucks Corporation (Nasdaq: SBUX) is an international coffee and coffeehouse chain based in Seattle, Washington, United States. Starbucks is the largest coffeehouse company in the world,[4] with 16,635 stores in 49 countries, including 11,068 in the United States, nearly 1,000 in Canada and DICK than 800 in Japan.[5] Starbucks sells drip brewed coffee, espresso-based hot drinks, other hot and cold drinks, coffee beans, salads, hot and cold sandwiches and paninis, pastry, snacks, and items such as mugs and tumblers. Through the Starbucks Entertainment division and Hear Music brand, the company also markets books, music, and film. Many of the company's products are seasonal or specific to the locality of the store. Starbucks-brand ice cream and coffee are also offered at grocery stores.

From Starbucks' founding in later forms in Seattle as a local coffee bean roaster and retailer, the company has expanded rapidly. In the 1990s, Starbucks was opening a new store every workday, a pace that continued into the 2000s. The first store outside the United States or Canada opened in the mid-'90s, and overseas stores now constitute almost one third of Starbucks' stores.[6] The company plans to open a net of 900 new stores outside of the United States in 2009,[7] but has announced 900 store closures in the United States since 2008.

Starbucks has been a frequent target of protests on issues such as fair-trade policies, labor relations, environmental impact, political views, and perceived anti-competitive practices.

History

The first Starbucks branch

Founding

The Starbucks Center, Seattle. The company HQ, in the old Sears, Roebuck and Co. catalog distribution center building

The original Starbucks was opened in Pike Place Market in Seattle, Washington, on March 30, 1971 by three partners: English teacher Jerry Baldwin, history teacher Zev Siegel, and writer Gordon Bowker. The three were inspired by entrepreneur Alfred Peet (whom they knew personally) to sell high-quality coffee beans and equipment.[8] From 1971–1976, that first Starbucks was at 2000 Western Avenue; it then was relocated to 1912 Pike Place, where it remains to this day. During their first year of operation, they purchased green coffee beans from Peet's, then began buying directly from growers.

Entrepreneur Howard Schultz joined the company in 1982 as Director of Retail Operations and Marketing, and after a trip to Milan, Italy advised that the company should sell coffee and espresso drinks as well as beans. The owners rejected this idea, believing that getting into the beverage business would distract the company from its primary focus. To them, coffee was something to be prepared in the home. Certain that there was money to be made selling pre-made drinks, Schultz started the Il Giornale coffee bar chain in April 1986.[9]

In 1984, the original owners of Starbucks, led by Baldwin, took the opportunity to purchase Peet's (Baldwin still works there).

During the 1980s Starbucks' benefits were enviable: part-time baristas not only had medical insurance, they had stock options.[citation needed]

Sale and expansion

In 1987, they sold the Starbucks chain to Schultz's Il Giornale, which rebranded the Il Giornale outlets as Starbucks and quickly began to expand. Starbucks opened its first locations outside Seattle at Waterfront Station in Vancouver, British Columbia, and Chicago, Illinois, that same year. At the time of its initial public offering on the stock market in 1992, Starbucks had grown to 165 outlets.

International expansion

Currently Starbucks is present in more than 55 countries.

North America and Caribbean South America Oceania Europe Africa Asia
  • Australia Australia
  • New Zealand New Zealand
International presence of Starbucks stores
Starbucks at West Coast Plaza, Singapore
Starbucks at İzmir,Turkey

The first Starbucks location outside North America opened in Tokyo, Japan, in 1996. Starbucks entered the U.K. market in 1998 with the $83 million[11] acquisition of the then 60-outlet, UK-based Seattle Coffee Company, re-branding all the stores as Starbucks.

In April 2003, Starbucks completed the purchase of Seattle's Best Coffee and Torrefazione Italia from AFC Enterprises, bringing the total number of Starbucks-operated locations worldwide to more than 6,400. On September 14, 2006, rival Diedrich Coffee announced that it would sell most of its company-owned retail stores to Starbucks. This sale includes the company-owned locations of the Oregon-based Coffee People chain. Starbucks converted the Diedrich Coffee and Coffee People locations to Starbucks, although the Portland airport Coffee People locations were excluded from the sale.[12]

Many bookstores have Starbucks outlets within them, including Barnes & Noble in the United States,Chapters-Indigo in Canada, Livraria Saraiva and Fnac in Brazil and B2S in Thailand.

Starbucks use the Bing Sutt design in Hong Kong

The Starbucks location in the former imperial palace in Beijing closed in July 2007. The coffee shop had been a source of ongoing controversy since its opening in 2000 with protesters objecting that the presence of the American chain in this location "was trampling on Chinese culture."[13][14][15][16] Also in 2007, Starbucks cancelled plans to expand into India,[17] but opened its first store in Russia, ten years after first registering a trademark there.[18] In 2008, Starbucks continued its expansion, settling in Argentina, Bulgaria, the Czech Republic and Portugal.[19] In Buenos Aires, the biggest Starbucks store in Latin America was opened. In April 2009, Starbucks entered Poland.[20] New stores will be opened in Algeria.[21] Starbucks has also opened its doors on 5 August 2009, in Utrecht, Netherlands. On October 21, 2009 it was announced that Starbucks will finally establish in Sweden, starting with a location at Arlanda airport outside Stockholm.[22]

Restaurant experiment

In 1999, Starbucks experimented with eateries in the San Francisco Bay area through a restaurant chain called Circadia.[23] These restaurants were soon "outed" as Starbucks establishments and converted to Starbucks cafes.

Howard Schultz, CEO of Starbucks

Corporate governance

Orin C. Smith was President and CEO of Starbucks from 2001 to 2005.

Starbucks' chairman, Howard Schultz, has talked about making sure growth does not dilute the company's culture[24] and the common goal of the company's leadership to act like a small company.

In January 2008, Chairman Howard Schultz resumed his roles as President and CEO after an eight year hiatus, replacing Jim Donald, who took the posts in 2005 but was asked to step down after sales slowed in 2007. Schultz aims to restore what he calls the "distinctive Starbucks experience" in the face of rapid expansion. Analysts believe that Schultz must determine how to contend with higher materials prices and enhanced competition from lower-price fast food chains, including McDonald's and Dunkin' Donuts. Starbucks announced it will discontinue its warm breakfast sandwich products, originally intended to launch nationwide in 2008, in order to refocus the brand on coffee, but the sandwiches were reformulated to deal with complaints and the product line stayed.[25] On February 23, 2008, Starbucks closed its stores from 5:30-9:00 p.m. local time to train its baristas.[26][27]

Recent changes

A typical sales area, this one in Peterborough, UK, showing a display of food and the beverage preparation area

In March 2008, Schultz made several announcements to Starbucks shareholders. Schultz introduced Starbucks' "state of the art espresso system",[28] the Thermoplan AG manufactured Mastrena, which replaced their previous superauto, the Thermoplan Verismo 801 (known internationally as the Thermoplan Black & White). Starbucks also announced that the company hopes to enter the energy drink market. Pre-ground beans will no longer be used, so that the grinding of whole bean coffee will "bring aroma, romance and theater" to American stores.[29] The company also announced the acquisition of The Coffee Equipment Company,[28] the manufacturer of the Clover Brewing System. They are currently test marketing this "fresh-pressed" coffee system at six Starbucks locations; three in Seattle, and three in Boston.[30]

Starbucks stopped using milk originating from rBGH-treated cows in 2007.[31]

In early 2008, Starbucks started a community website, My Starbucks Idea, designed to collect suggestions and feedback from customers. Other users 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". The website is powered by the Salesforce software.[32]

In May 2008, a loyalty program was introduced for registered users of the Starbucks Card (previously simply a gift card) offering perks such as free Wi-Fi Internet access, no charge for soy milk & flavored syrups, and free refills on brewed drip coffee.[33] Free Wi-Fi Internet access varies in different regions. US & Canadian card holders can access 2 hours of Internet access through AT&T in the United States and through Bell Canada within Canada. In Germany customers can get 1 hour of free Wi-Fi with a voucher card, and in Switzerland and Austria customers can get 30 minutes the same way (through T-Mobile). Additionally, Starbucks Gold, a $25 yearly membership, entitles members to 10% off all purchases (besides iTunes, magazines, and payment for the membership/gift card) in Starbucks (not Barnes & Noble) stores, and along with 3 10% off guest passes, allows for a member to bring people in for friends and family day, allows for free treats throughout the year, and members-only discounts.

In June 2009, the company announced that it will be overhauling its menu and selling salads and baked goods without high-fructose corn syrup or artificial ingredients.[34] The move is expected to attract health- and cost-conscious consumers and will not affect prices.[34]

In September 2009, Starbucks in the UK rolled out free Wi-Fi at most of its outlets, working with its WiFi partner BT Openzone. Customers with a Starbucks Card will be able to log-on to the Wifi in-store for free with their card details, thereby bringing the benefits of the loyalty program in-line with the US.[35]

In October 2009, Starbucks rolled out its new instant coffee packets called Via to Starbucks stores across the U.S. and Canada. The company had been testing the product in Seattle, Chicago and London for a few months. Starbucks claims consumers can’t tell the difference between a cup of Starbucks drip coffee and one made with Via. Some analysts worry that by introducing instant coffee, Starbucks will devalue its own brand.[36]

In December 2009, Starbucks updated the reward system.

Store closures

On July 1, 2008, the company announced it was closing 600 underperforming company-owned stores and cutting U.S. expansion plans amid growing economic uncertainty.[37][38] On July 29, 2008, Starbucks also cut almost 1,000 non-retail jobs as part of its bid to reenergize the brand and boost its profit. Of the new cuts, 550 of the positions were layoffs and the rest were unfilled jobs.[39] These closings and layoffs effectively ended the company’s period of growth and expansion that began in the mid-1990s.

Starbucks also announced in July 2008 that it would close 61 of its 84 stores in Australia by August 3, 2008.[40] Nick Wailes, an expert in strategic management of the University of Sydney, commented that "Starbucks failed to truly understand Australia’s cafe culture."[41]

On January 28, 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.[42]

In August 2009, Ahold announced closures and rebranding for nearly half, 43 exactly, of their licensed store Starbucks kiosks for their US based Stop & Shop and Giant supermarkets. Ahold has not abandoned the licensed Starbucks concept yet, they plan to open 5 new licensed stores by the end of 2009.[43][44]

2009 New York City bombing

At approximately 3:30 a.m. on May 25, 2009, a Starbucks store on the Upper East Side in the Manhattan borough of New York City, New York, was bombed. A small improvised explosive device was used and damage was limited to exterior windows and a sidewalk bench; there were no injuries.[45] Residents of apartments above the bombing site were briefly evacuated.[46] Police believed at first that the bombing may be related to a serial bomber operating in Manhattan,[46] because it was similar in nature to earlier bombings in Manhattan at the British and Mexican consulates, as well as a U.S. military-recruiting center in Times Square.[47] However, a 17-year-old boy was arrested that July after boasting that he bombed the store to emulate the movie Fight Club.[48]

Debranding

In 2009, at least three stores in Seattle are being 'debranded' to remove the logo and brand name, and remodel the stores as local coffee houses "inspired by Starbucks."[49][50] The first, 15th Avenue Coffee and Tea, opened in July on Capitol Hill after Starbucks employees visited local coffee houses on 'observation' trips. It serves wine and beer, and plans to host live music and poetry readings.[51] The stores have been called "stealth Starbucks"[49][52] and the practice has been criticized as "local-washing", similar to greenwashing.[53]

Intellectual property

Starbucks U.S. Brands, LLC, is a Starbucks-owned company that currently holds and owns the property rights to approximately 120 Starbucks Coffee Company patents and trademarks. It is located at 2525 Starbucks Way in Minden, Nevada.[54]

Name

The company is named in part after Starbuck, Captain Ahab's first mate in the novel Moby-Dick, as well as a turn-of-the-century mining camp (Starbo or Storbo) on Mount Rainier. According to Howard Schultz's book Pour Your Heart Into It: How Starbucks Built a Company One Cup at a Time, the name of the company was derived from Moby-Dick, although not in as direct a fashion as many assume. Gordon Bowker liked the name "Pequod" (the ship in the novel), but his then creative partner Terry Heckler responded, "No one's going to drink a cup of Pee-quod!" Heckler suggested "Starbo". Brainstorming with these two ideas resulted in the company being named for the Pequod's first mate, Starbuck.[55]

International names

Starbucks at Ibn Battuta Mall, Dubai
A store in Seoul, South Korea. Unlike the usual Starbucks display, this sign is not written in English.
A store in Xian, China.

Starbucks is known internationally by the following names:

  • Arabic-speaking countries: ستاربكس (transliteration: stārbaks)
  • Bulgaria: Старбъкс (transliteration: Starbâks)
  • China,Hong Kong, Macau, Taiwan: 星巴克 Pinyin: xīngbākè (星 xīng means "star", while 巴克 is a transliteration of "-bucks")
  • Israel: סטארבקס (transliteration: sṭārbaqs)
  • Japan: スターバックス (transliteration: sutābakkusu)
  • Russia: Старбакс (transliteration: Starbaks)
  • South Korea: 스타벅스 (transliteration: seutabeokseu), often used in conjunction with the English name
  • Quebec, Canada: Café Starbucks Coffee[56]
  • Thailand: สตาร์บัคส์ IPA: [satāːbākʰ]
Original brown logo

In 2006, Valerie O'Neil, a Starbucks spokeswoman, said that the logo is an image of a "twin-tailed siren".[57] The logo has been significantly streamlined over the years. In the first version, which was based on a 17th-century Norse woodcut[55], the Starbucks siren was topless and had a fully visible double fish tail.[58] The image also had a rough visual texture and has been likened to a melusine.[59] In the second version, which was used from 1987–92, her breasts were covered by her flowing hair, but her navel was still visible, and the fish tail was cropped slightly. In the current version, used since 1992, her navel and breasts are not visible at all, and only vestiges remain of the fish tails. The original "woodcut" logo has been moved to the Starbuck's Headquarters in Seattle.

At the beginning of September 2006 and then again in early 2008, Starbucks temporarily reintroduced its original brown logo on paper hot-drink cups. Starbucks has stated that this was done to show the company's heritage from the Pacific Northwest and to celebrate 35 years of business. The vintage logo sparked some controversy due in part to the siren's bare breasts,[60] but the temporary switch garnered little attention from the media. Starbucks had drawn similar criticism when they reintroduced the vintage logo in 2006.[61] The logo was altered when Starbucks entered the Saudi Arabian market in 2000 to remove the mermaid, leaving only her crown,[62] as reported in a Pulitzer Prize-winning column by Colbert I. King in The Washington Post in 2002. The company announced three months later that it would be using the international logo in Saudi Arabia.[63]

Parodies and infringements

Starbucks is a frequent target of parodies and imitations of its logo, and often uses legal action against those it perceives to be infringing on its intellectual property. In 2000, San Francisco cartoonist Kieron Dwyer was sued by Starbucks for copyright and trademark infringement after creating a parody of its siren logo and putting it on the cover of one of his comics; later placing it on coffee mugs, t-shirts, and stickers that he sold on his website and at comic book conventions. Dwyer felt that since his work was a parody it was protected by his right to free speech under U.S. law. The case was eventually settled out of court, as Dwyer claimed he did not have the financial ability to endure a trial case with Starbucks. The judge agreed that Dwyer's work was a parody and thus enjoyed constitutional protection; however, he was forbidden from financially "profiting" from using a "confusingly similar" image of the Starbucks siren logo. Dwyer is currently allowed to display the image as an expression of free speech, but he can no longer sell it.[64] In a similar case, a New York store selling stickers and T-shirts using the Starbucks logo with the words "fuck off" was sued by the company in 1999.[65][66] An anti-Starbucks website, starbuckscoffee.co.uk, which encouraged people to deface the Starbucks logo[67] was transferred to Starbucks by Nominet UK, the registry for .uk domain names in 2005.[68][69] Christian bookstores and websites in the US are selling a T-shirt featuring a logo with the mermaid replaced by Jesus and the words "Sacrificed for me" around the edge.[70]

Other successful cases filed by Starbucks include the case won in 2006 against the chain Xingbake in Shanghai, China for trademark infringement, because the chain used a green-and-white logo with a name that sounded phonetically similar to the Chinese for Starbucks.[71] Starbucks did not open any stores after first registering its trademark in Russia in 1997 and in 2002 a Russian lawyer successfully filed a request to cancel the trademark. He then registered the name with a Moscow company and asked for $600,000 to sell the trademark to Starbucks, but was ruled against in November 2005.[18] A coffee store owner in Oregon called Sam Buck was prohibited from using her name on the shop front in 2006.[72]

In 2003, Starbucks sent a cease-and-desist letter to "HaidaBucks Coffee House" in Masset, British Columbia, Canada. The store was owned by a group of young Haida men, commonly referred to as "bucks." After facing criticism, Starbucks dropped its demand after HaidaBucks dropped "coffee house" from its name.[73]

Other cases have gone against the company. In 2005 Starbucks lost a trademark infringement case against a smaller coffee vendor in South Korea that operates coffee stations under the name Starpreya. The company, Elpreya, says Starpreya is named after the Norse goddess, Freja, with the letters of that name changed to ease pronunciation by Koreans. The court rejected Starbucks' claim that the logo of Starpreya is too similar to their own logo.[74] A bar owner in Galveston, Texas, USA won the right to sell "Star Bock Beer" after a lawsuit by Starbucks in 2003 after he registered the name, but the 2005 federal court ruling also stated that the sale of the beer must be restricted to Galveston, a ruling upheld by the Supreme Court in 2007.[75]

Ongoing cases include a dispute over the copyright application for Seattle’s Rat City Rollergirls logo in 2008[76] The company claimed the roller derby league’s logo by a Washington artist[77] was too similar to its own. Starbucks requested an extension to further examine the issue and possibly issue a complaint, which was granted by the Trademark Office. The July 16, 2008 deadline passed without action by the corporation.[78] Starbucks launched action against an Indian cosmetics business run by Shaznaz Husain, after she applied to register the name Starstruck for use with coffee and related products. She said her aim was to open a chain of stores selling coffee and chocolate-based cosmetics.[72]

Others have used the Starbucks logo unaltered and without permission, such as a café in Pakistan that used the logo in 2003 in its advertisements[79] and a cafe in Cambodia in 2009, the owner saying that "whatever we have done we have done within the law".[80]

Corporate social responsibility

Starbucks releases an annual Corporate social responsibility report.[81]

Grounds for your Garden

Environmental impact

In 1999, Starbucks started "Grounds for your Garden" to make their business more environmentally-friendly. This gives leftover coffee grounds to anyone requesting it for composting. Although not all stores and regions participate, customers can request and lobby their local store to begin the practice.

In 2004, Starbucks began reducing the size of their paper napkins and store garbage bags, and lightening their solid waste production by 816.5 metric tons (1.8 million pounds).[82] In 2008, Starbucks was ranked #15 on the U.S. Environmental Protection Agency's list of Top 25 Green Power Partners for purchases of renewable energy.[83]

In October 2008, The Sun newspaper reported that Starbucks was wasting 23.4 million litres of water a day by leaving a tap constantly running for rinsing utensils in a 'dipper well' in each of its stores,[84] but this is often required by governmental public health code.[85]

In June 2009, in response to concerns over its excessive water consumption, Starbucks re-evaluated its use of the dipper well system. In September 2009, company-operated Starbucks stores in Canada & the United States successfully implemented a new water saving solution that meets government health standards. Different types of milk are given a dedicated spoon that remains in the pitcher and the dipper wells were replaced with push button metered faucets for rinsing. This will purportedly save up to 150 gallons of water per day in every store.[citation needed]

A bin overflowing with Starbucks cups

Recycling

The U.S. Food and Drug Administration granted the first-ever approval to use recycled content in food packaging for Starbucks coffee cups. In 2005 Starbucks received the National Recycling Coalition Recycling Works Award.[86]

Starbucks bought 2.5 billion cups for stores in North America in 2007. The 10% recycled paper cups used by Starbucks are not recyclable, because the plastic coating that prevents the cup from leaking also prevents it from being recycled. The plastic cups used for cold drinks are also non-recyclable in most regions. Starbucks cups were originally made using plastic #1 (polyethylene terephthalate, PETE) but were changed to plastic #5 (polypropylene, PP). The former type of plastic can be recycled in most regions of the U.S. whereas the latter cannot. Starbucks is considering using biodegradable material instead of plastic to line the cups, and is testing composting of the existing cups. The exception to this is stores in Winnipeg, Manitoba, Canada, where paper cups are recycled to a local company called "Wriggler's Wranch", where they are composted. The majority Starbucks stores do not have recycling bins; only 1/3 of company-owned stores recycled any materials in 2007,[87] however recent improvements have been made and recycling bins are popping up in more stores (the only thing hindering Starbucks' ability to have bins in every store is the lack of facilties for storage and collection of recycling in certain areas.) Allen Hershkowitz of the Natural Resources Defense Council says that Starbucks claimed they were using only 10% recycled material partly because the recycled material costs more.[88]

Starbucks gives customers a 10-cent discount when they bring their own reusable cup, and it now uses corrugated cup sleeves made from 60 percent post-consumer recycled fiber.[87]

Fair trade

Starbucks coffee beans

In 2000, the company introduced a line of fair trade products.[89] Of the approximately 136,000 metric tons (300 million pounds) of coffee Starbucks purchased in 2006, about 6 percent was certified as fair trade.[90]

According to Starbucks, they purchased 2,180 metric tons (4.8 million pounds) of Certified Fair Trade coffee in fiscal year 2004 and 5,220 metric tons (11.5 million pounds) in 2005. They have become the largest buyer of Certified Fair Trade coffee in North America (10% of the global market). Transfair USA,[91] the only third-party certifier of Fair Trade Certified coffee in the United States, has noted the impact Starbucks has made in the area of Fair Trade and coffee farmer's lives:

Since launching {its} FTC coffee line in 2000, Starbucks has undeniably made a significant contribution to family farmers through their rapidly growing FTC coffee volume. By offering FTC coffee in thousands of stores, Starbucks has also given the FTC label greater visibility, helping to raise consumer awareness in the process.

From September 2, 2009 all Espresso Roast sold in the UK and Ireland is 100% Fairtrade. This means that the coffee in all Cappuccinos, Lattes, Mochas, Americanos etc are brewed with 100% Fairtrade Espresso.

Groups such as Global Exchange are calling for Starbucks to further increase its sales of fair trade coffees.

Beyond Fair Trade Certification, Starbucks argues that it pays above market prices for all of its coffee. According to the company, in 2004 it paid on average $1.42 per pound ($2.64 kg) for high-quality coffee beans.[92] This is in comparison to commodity prices which were as low as $0.50–$0.60 in 2003–2004.[93]

A Starbucks barista

Staff training

Black aprons displaying the title "Coffee Master" are worn by employees who have completed the Coffee Master course, which educates employees in coffee tasting, growing regions, roasting, and purchasing (including fair trade). Almost 70% of the coffee used by Starbucks around the world comes from the sixth major producer in the world, Guatemala, a pro-organic producer.

A display of Ethos water

Ethos water

Ethos, a brand of bottled water acquired by Starbucks in 2005, is sold at locations throughout North America. Ethos bottles feature prominent labeling stating "helping children get clean water", referring to the fact that $.05 from each $1.80 bottle sold ($.10 per bottle in Canada) is used to fund clean water projects in under-developed areas. Although sales of Ethos water have raised over $6,200,000 for clean water efforts, the brand is not a charity. Critics have argued that the claim on the label misleads consumers into thinking that Ethos is primarily a charitable organization, when it is actually a for-profit brand and the vast majority of the sale price (97.2%) does not support clean-water projects.[94][95] The founders of Ethos have stated that the brand is intended to raise awareness of third-world clean water issues and provide socially responsible consumers with an opportunity to support the cause by choosing Ethos over other brands.[96] Starbucks has since redesigned the American version of the Ethos water bottles, stating the amount of money donated per bottle in the description.

Product Red

Starbucks began selling Product Red goods in November 2008, enabling the supply of AIDS medicine for 3,800 people for a year.[97]

New Orleans

Main article: Reconstruction of New Orleans

In 2008, Starbucks announced a volunteer program in New Orleans, three years after Hurricane Katrina. According to Rebuilding Together New Orleans, employees will work on various projects, including houses, planting trees and an urban garden. A volunteer coordinator said that "I've never seen this magnitude from one corporation before, I'll say that, in terms of the sheer numbers."[98]

Sparkhope

In 2004, UNICEF Philippines and Starbucks launched SparkHope, a programme in which Starbucks stores in the Philippines provide early childhood care and development for children in a particular community. An area in each store contains a donation box and shows photos of the adopted community and information about UNICEF’s programme.[99]

Criticism and controversy

Two Starbucks stores in one shopping center in Queens, New York

Market strategy

Some of the methods Starbucks have used to expand and maintain their dominant market position, including buying out competitors' leases, intentionally operating at a loss, and clustering several locations in a small geographical area (i.e., saturating the market), have been labeled anti-competitive by critics.[100] For example, Starbucks fueled its initial expansion into the UK market with a buyout of Seattle Coffee Company, but then used its capital and influence to obtain prime locations, some of which operated at a financial loss. Critics claimed this was an unfair attempt to drive out small, independent competitors, who could not afford to pay inflated prices for premium real estate.[101] Starbucks in the 2000s greatly increased its "licensed store" franchise system, which permits Starbucks franchises only if they contribute to less than 20% of the franchisees gross income, are inside other stores or in limited or restricted access spaces, as to not dilute the brand image. Franchise agreements are rare in volume and usually only made with Fortune 1000 or similar sized chain stores.[102] The licensed store system can create the illusion of 2 or more Starbucks cafes in the same shopping plaza, when one is a standalone company owned, and the others are licensed. The menus of licensed stores can be the same or trimmed or modified versions of the cafes, or be positioned as independent cafes that happen to sell Starbucks products (ex. Barnes & Noble). The policy of clustering stores was parodied in The Onion with the headline, "New Starbucks Opens In Rest Room Of Existing Starbucks".[103]

The Reverend Billy leading an anti-Starbucks protest in Austin, Texas in 2007

Labor disputes

Starbucks workers in seven stores have joined the Industrial Workers of the World (IWW) as the Starbucks Workers Union since 2004.[104]

Starbucks in the Financial District of Boston, Massachusetts

According to a Starbucks Union press release, since then the union membership has begun expanding to Chicago and Maryland in addition to New York City, where the movement originated.[105][106] On March 7, 2006, the IWW and Starbucks agreed to a National Labor Relations Board settlement in which three Starbucks workers were granted almost US$2,000 in back wages and two fired employees were offered reinstatement.[107][108][109] According to the Starbucks Union, on November 24, 2006, IWW members picketed Starbucks locations in more than 50 cities around the world in countries including Australia, Canada, Germany, and the UK, as well as U.S. cities including New York, Chicago, Minneapolis and San Francisco,[110] to protest the firing of five Starbucks Workers Union organizers by Starbucks and to demand their reinstatement.

Some Starbucks baristas in Canada,[111] Australia and New Zealand,[112] and the United States[113] belong to a variety of unions.

In 2005, Starbucks paid out US$165,000 to eight employees at its Kent, Washington, roasting plant to settle charges that they had been retaliated against for being pro-union. At the time, the plant workers were represented by the IUOE. Starbucks admitted no wrongdoing in the settlement.[104]

A Starbucks strike occurred in Auckland, New Zealand, on November 23, 2005.[112] Organized by Unite Union, workers sought secure hours, a minimum wage of NZ$12 an hour, and the abolition of youth rates. The company settled with the Union in 2006, resulting in pay increases, increased security of hours, and an improvement in youth rates.[114]

In March 2008, Starbucks was ordered to pay baristas over US$100 million in back tips in a Californian class action lawsuit launched by baristas alleging that granting shift-supervisors a portion of tips violates state labor laws. The company plans to appeal. Similarly, an 18 year-old barista in Chestnut Hill, MA has filed another suit with regards to the tipping policy. Massachusetts law also states that managers may not get a cut of tips.[115][116] A similar lawsuit was also filed in Minnesota on March 27, 2008.[117]

Opening without planning permission

Starbucks has been accused by local authorities of opening several stores in the United Kingdom in retail premises, without the planning permission for a change of use to a restaurant. Starbucks has argued that "Under current planning law, there is no official classification of coffee shops. Starbucks therefore encounters the difficult scenario whereby local authorities interpret the guidance in different ways. In some instances, coffee shops operate under A1 permission, some as mixed use A1/A3 and some as A3".[118]

In May 2008, a branch of Starbucks was completed on St. James's Street in Kemptown, Brighton, England, despite having been refused permission by the local planning authority, Brighton and Hove City Council, who claimed there were too many coffee shops already present on the street.[119][120] Starbucks appealed the decision by claiming it was a retail store selling bags of coffee, mugs and sandwiches, gaining a six month extension,[121] but the council ordered Starbucks to remove all tables and chairs from the premises by 20 February 2009, to comply with planning regulations for a retail shop.[122] 2500 residents have signed a petition against the store, and public inquiry is due to be held on 10 June 2009.[123]

A Starbucks in Hertford won its appeal in April 2009 after being open for over a year without planning permission.[124] Two stores in Edinburgh,[125] one in Manchester,[126] one in Cardiff,[127] one in Pinner, Harrow,[118] and one in Blackheath, Lewisham[128][129] were also opened without planning permission.

Arab protests

There have been calls in the Arab world for a boycott of Starbucks because of unfounded rumors that Starbucks sends part of its profits to the Israel Defense Forces.[130] These rumors apparently originated with a spoof letter published on a website.[131]

In 1998, Starbucks CEO Schultz was awarded the "The Israel 50th Anniversary Tribute Award" from the Jerusalem Fund of Aish Ha-Torah for "playing a key role in promoting a close alliance between the United States and Israel".[132]

Starbucks was a regular target of activists protesting against the Gaza War. Starbucks was forced to close a store in Beirut, Lebanon because of demonstrators shouting anti-Israel slogans, repeating the claim about support for the Israeli military.[133][dead link][134] Starbucks responded by saying "Rumors that Starbucks Coffee Company and its management support the Israeli army are unequivocally false.... Starbucks is a nonpolitical organization and does not support political causes. Further, political preferences of a Starbucks partner employee at any level have absolutely no bearing on Starbucks company policies."[134]

Accusations by Egyptian cleric

On January 25, 2009, Egyptian Cleric Safwat Higazi claimed that Starbucks's "siren" logo is actually a depiction of the ancient Jewish queen Esther. He then called for Muslims to boycott all Starbucks coffee shops in the Arab world.[135] Columnist Melanie Phillips has satirised this idea as the "The Protocol of the Drinkers of Coffee".[136]

A store on Piccadilly with its windows boarded up after being smashed by protesters

Violence against Starbucks in the United Kingdom

On January 12, 2009, a Starbucks in Whitechapel Road in London was the target of vandalism by pro-Palestinian demonstrators who broke windows and reportedly ripped out fittings and equipment after clashes with riot police. In the early hours of the following morning a suspected makeshift firebomb was hurled into the premises, causing further damage.[134][137][138]

On January 17, 2009, a pro-Gaza protest was held by the Stop the War Coalition in Trafalgar Square in central London. After the rally, two groups of people, some hiding their faces, smashed and looted two Starbucks on Piccadilly and Shaftesbury Avenue. Although the stores had requested greater police protection following the violence against a Starbucks the previous week, Scotland Yard stated it could "not stop thugs hell-bent on causing damage."[137][139][140][141]

The Way I See It

Quotes by artists, writers, scientists and others have appeared on Starbucks cups since 2005 in a campaign called "The Way I See It".[142] Some of the quotes have caused controversy, including one by gay writer Armistead Maupin and another by Jonathan Wells that linked 'Darwinism' to eugenics, abortion and racism.[143] The cups bear messages that state that these views are not necessarily those of Starbucks or its employees.

US military viral email

A US Marines Sergeant emailed ten of his friends in August 2004 having wrongly been told that Starbucks had stopped supplying the military with coffee donations because the company did not support the Iraq war. The email became viral, being sent to tens of millions of people. Starbucks and the originator sent out a correction,[144] but Starbucks' VP of global communications, Valerie O'Neil, says the email is still forwarded to her every few weeks.[145][146][147]

Music, film, and television

Main article: Hear Music
Starbucks' second Hear Music Coffeehouse at the South Bank development adjacent to the River Walk in downtown San Antonio, Texas.

Hear Music is the brand name of Starbucks' retail music concept. Hear Music began as a catalog company in 1990, adding a few retail locations in the San Francisco Bay Area. Hear Music was purchased by Starbucks in 1999. Nearly three years later, in 2002, they produced a Starbucks opera album, featuring artists such as Luciano Pavarotti, followed in March 2007 by the hit CD "Memory Almost Full" by Paul McCartney, making McCartney the first artist signed to New Hear Music Label sold in Starbucks outlets. Its inaugural release was a big non-coffee event for Starbucks the first quarter of 2007.

In 2006, the company created Starbucks Entertainment, one of the producers of the 2006 film Akeelah and the Bee. Retail stores heavily advertised the film before its release and sold the DVD.[148]

Partnership with Apple

Starbucks has agreed to a partnership with Apple to collaborate on selling music as part of the "coffeehouse experience". In October 2006, Apple added a Starbucks Entertainment area to the iTunes Store, selling music similar to that played in Starbucks stores. In September 2007 Apple announced that customers would be able to browse the iTunes Store at Starbucks via Wi-Fi in the US (with no requirement to login to the Wi-Fi network), targeted at iPhone, iPod touch, and MacBook users. The iTunes Store will automatically detect recent songs playing in a Starbucks and offer users the opportunity to download the tracks. Some stores feature LCD screens with the artist name, song, and album information of the current song playing. This feature has been rolled out in Seattle, New York City, and the San Francisco Bay Area, and was offered in limited markets during 2007–2008.[149] During the fall of 2007, Starbucks also began to sell digital downloads of certain albums through iTunes. Starbucks gave away 37 different songs for free download through iTunes as part of the "Song of the Day" promotion in 2007, and a "Pick of the Week" card is now available at Starbucks for a free song download. A Starbucks "app" is available in the iPhone "App Store."

Partnership with MSNBC

Starting on June 1, 2009, the MSNBC morning news program Morning Joe has been presented as "brewed by Starbucks" and the show's logo changed to include the company logo. Although the hosts have previously consumed Starbucks coffee on air "for free" in the words of MSNBC president Phil Griffin, it was not paid placement at that time.[150] The move was met with mixed reactions from rival news organizations, viewed as both a clever partnership in an economic downturn and a compromise of journalistic standards.[151]

See also

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Further reading

  • Michelli, Joseph A. (2006). The Starbucks experience: 5 principles for turning ordinary into extraordinary, 208 pages. ISBN 0-07-147784-5.
  • Schultz, Howard and Dori Jones Yang. (1997). Pour Your Heart Into It: How Starbucks Built A Company One Cup At A Time, 350 pages. ISBN 0-7868-6315-3.
  • Behar, Howard with Janet Goldstein. (2007). It's Not About The Coffee: Leadership Principles from a Life at Starbucks, 208 pages. ISBN 1591841925.
  • Clark, Taylor. (2007). Starbucked: A Double Tall Tale of Caffeine, Commerce and Culture. 336 pages. ISBN 031601348X.
  • Simon, Bryant. (2009). Everything but the Coffee: Learning about America from Starbucks. 320 pages. ISBN 0520261062.

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Cited text

  • Pendergrast, Mark (2001) [1999]. Uncommon Grounds: The History of Coffee and How It Transformed Our World. London: Texere. ISBN 1-58799-088-1.
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