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How Starbucks Makes Their Money

Name: How Starbucks Makes Their Money
Uploaded: 2024-08-14T21:00:05+00:00
Duration: 33 s
Channel: Shanli Liu, CPA, CTP
Description: In this concise monologue, the speaker explains that Starbucks generates $41 billion annually and outperforms other coffee chains primarily through…

14 Aug 2024 · 1 min

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In this concise monologue, the speaker explains that Starbucks generates $41 billion annually and outperforms other coffee chains primarily through vertical integration. Starbucks cultivates exclusive relationships with coffee farmers, controls the roasting process in-house to avoid markup, and owns the entire retail distribution network, from bean cultivation to the final cup sold to consumers. This end‑to‑end ownership of the supply chain enables the company to capture profit at every stage.

Chapters

Starbucks makes $41 billion a year, and they're able to do that and beat every other coffee company because they're vertically integrated. And so the big thing they have is one, vertical integration through coffee bean supply. So they have relationships with farmers on the ground to get exclusive beans for them. The next thing is that they own the roasting production, and so they're not buying and having a markup when they're getting the roasted beans. They actually manage the roasting themselves. And because they have all of the retail distribution of brick and mortar, they have everything from the bean getting grown to the person buying that warm cup every morning. And so they own the entire supply chain and they can make profit all the way through.