Are you an entrepreneur looking to get into coffee business and want to open a Starbucks coffee franchise in USA or any other country? Here’s a complete guide on how to open Starbucks franchise, cost of buying Starbucks franchise and other important details.
Over 2.25 billion cups of coffee are consumed in the world every day and over 150 million people in the United States drink coffee on a daily basis. Number seems huge, isn’t it?
Well, according to a survey 64% of Americans drink a cup of coffee every day which is up 2% compared to only 62% in 2017.
Whole world loves the iconic Starbucks coffee and there are also local and national brands that compete with Starbucks in the U.S. as well as across the world.
A brief History of Starbucks Coffee
It was founded in 1971 as a coffee bean retailer and is now the world’s largest multinational chain of coffee shops that serves espresso based drinks, drip brewed coffee, tea, bottled beverages, pastries, cup cakes and ready-to-eat sandwiches.
The first outlet was opened in Seattle, Washington in Pike Place Market in the year 1971 by three partners, Jerry Baldwin, Zev Siegel, and Gordon Bowker, selling high-quality coffee beans and coffee equipment. . During their first year of operation, they purchased green coffee beans from Peet’s, then began buying directly from coffee growers.
Entrepreneur Howard Schultz who’s now known as the founder of Starbucks, joined the company in 1982 and that time company was still selling coffee beans.
Schultz suggested the owners that the company should also sell espresso drinks and drip-brew coffee along with beans but owners rejected his idea, believing that getting into the beverage business would distract the company from its focus.
But believing in his own idea of selling espresso drinks, to on-the-go Americans, Schultz started the Il Giornale coffee bar chain in 1985.
In 1987 the original founders of Starbucks sold the brand to Schultz’s Il Giornale, which was then re-branded as Starbucks and quickly began to expand.
Starbucks opened its first locations outside Seattle in Vancouver, British Columbia, Canada (at Waterfront Station) and Chicago, Illinois, United States that same year. At the time of its IPO (initial public offering) on the stock market in 1992, it had already grown to 165 outlets.
Today, it has more than 23 000 outlets worldwide – both owned and licensed.
Interesting facts about Starbucks coffee and Worldwide Coffee Sales revenue
- Starbucks revenue worldwide stood at US $24.72 billion.
- It’s market share in the United States coffee market – 38%.
- Revenue from beverages – US $14.46 billion.
- Total number of outlets worldwide – 29,324.
- Outlets in the U.S. 14,606.
- It had likely used between 2.916 and 2.946 billion cups at their stores, or an average of 8,070,428 per day, according to it’s annual reports of 2018.
- According to Starbucks, 75 million customers visits its stores every month in the US and over 15.1 million members have signed up for its rewards program.
- Starbucks single-cup coffee sales accounted for 609.9 million U.S. dollars, in the year 2017.
- It was the second most valuable fast food brand worldwide after McDonald’s in 2018, with a brand value of about 44.5 billion U.S. dollars.
- In the year 2018, it spent US $260.3 million on advertising.
How to Open Starbucks Outlet?
As mentioned above, Starbucks has over 23,324 stores in over 100 countries of the world and their revenue stood at US $24.72 billion in the last fiscal.
Note: Starbucks does not offer franchise, but what it offers is a licensed outlet which basically means that you cannot own the outlet as in a franchise model but instead you pay a licensing fee to rent the brand.
According to the company, licensing outlets helps them take more control over the outlets and product quality.
Cost of Buying a Starbucks Licensed Store
- Approx. Cost of opening one Starbucks licensed store is $315,000.
The company has about 4,400 licensed outlets world-wide and the company prefers to use licensing instead of selling franchise in order to keep more control over its outlets and the quality of its products.
Only about one in five stores in Europe, the Middle East, and Africa are company-run. In Asia, where Starbucks is currently looking for growth, a little less than half are company-operated.
Explanatory Video on how to Apply for a Starbucks Franchise
How to Apply for opening Starbucks Licensed Outlets?
Follow the steps below to apply for a license:
- Visit the Starbucks website and apply for a licensed store by registering yourself.
- Next, you have to write a formal application and fill out your preferred business location, assets and liabilities and the cash you have at hand.
- Submit your application and wait for feedback from the licensing team.
How to Open a Starbucks Franchise?
As mentioned above, it is nearly impossible to open a Starbucks coffee store as franchise in US or Canada, but there are exceptions if you live in other countries outside of US or Canada such as China or UK.
Though, the company does not offer franchise but for those of you who are still interested to buy Starbucks franchise, you must reside in a European country such as France or England.
You must fulfill the below mentioned conditions in order to be allowed to open a Franchise.
Conditions mentioned here were required from when the company was still franchising in these countries:
- A person looking to buy Starbucks franchise should have at least 500,000 pounds of liquid assets.
- You need to have substantial amount of experience in the food or beverage industry and you should own or be running multiple business or restaurant.
- You should be willing and able to open a lot of outlets in a very short time. You should be able to open at least 20 locations in 5 years of starting the business. It should be known that the company’s first 45 franchised locations were owned by 9 franchisees only. That is an average of 5 Starbucks locations per owner. After the first 9 franchisees, Starbucks decided that it has had enough of franchises.
- Starbucks franchise team would assist the franchise owner in getting a suitable location to open franchise and to check if a franchise or outlet is complying with the companies policies and rules.
How to Buy a Starbucks Franchise?
The first thing to ensure is that you live in a preferred location, which is Europe, before seeking to open Starbucks franchise. If you don’t reside in Europe, then you must be willing to move or change location.
The next step is to file an application for the same and wait for the feedback. Your application may get rejected or accepted based on various factors and circumstances.
If your application is accepted, then you would be required to pay the fees and start the training program. The training would be for you and your staff.
Once you open your first Starbucks coffee outlet, you should start making plans to open more stores soon. In fact, you are mandated to open at least 4 stores in one year and a total of 20 stores under 5 years of the initial agreement.
- Cost to buy Starbucks Franchise is approx. US $315,000
To acquire a Starbucks franchise, you need to have about 500,000 pounds in liquid assets.
Other Options for opening Starbucks Franchise
If you are not in Europe or in a country such as France or England, you can consider moving to South East Asia if you are seeking to open Starbucks outlet.
You can move to China as Starbucks does operate its stores using a franchise model internationally. So if you’ve always dreamed of opening Starbucks then selling coffee in warm and tropical climates, China may be a suitable location for you. In fact Starbucks has been expanding outside of North America since 1996, when it opened stores in Japan and Singapore.
Today, Starbucks operates in over 100 countries, with approximately 12,000 stores located outside of the United States.
Here are the pictures of 50 most beautiful Starbucks around the world.
China has been the second largest market for Starbucks, where it’s revenues have been positive and a new Starbucks outlet opens approximately every 15 hours.
The company is also eyeing growth and expansion in India where it currently runs 75 high-performing stores and which is expected to be fertile ground for the company’s specialty tea brand, Teavana.
Starbucks Franchise Profits and Operating Costs
One an average a single Starbucks store costs US $1770 per day in operating costs which totals up to US $646,000 in expenses.
Since, Starbucks wants its franchise owners to open at least 20 outlets in a period of 5 years, you can expect to make profits of approx. US $120,000 from a single outlet and US $2.4 million in profits from 20 outlets.
Depending on the season your sales and profits may fluctuate but Starbucks coffee is always in demand, especially among working population.
Starbucks Franchise Reviews
I do not like feeling like a burden when it comes to getting food or ordering drinks. My orders are very simple, no crazy customizations or anything, but this place did have a bit of annoyance from the employees. They were more focused in what they were doing and their conversations than making you feel heard. The drinks were make correctly, so props there.
Very slow and way overpriced….On a recent trip to Vegas, we stayed in Harrah’s Hotel and Casino. Since we were leaving at 9 AM with a group of people to drive to our next destination, we decided to get a quick breakfast at the Starbuck’s right in the casino. Well, it was anything but quick. And it certainly wasn’t cheap.
Alternate to Starbucks Franchise – Open Dunkin Donuts Franchise instead
If you do not want to get into hassles of opening a licensed Starbucks store or move to a different country to buy Starbucks franchise then here’s an alternate to that.
Buy a Dunkin Donuts Franchise
Well, we don’t know which coffee you like the most Starbucks or Dunkin donuts but opening Dunkin Donuts franchise makes sense as it operates under a franchise model since beginning.
In fact, you would be surprised to know that at the start of 2018, there were no company-owned Dunkin’ Donuts in the world.
Dunkin Donuts ranked No. 2 on the Franchise 500 this year, and it has more than 9,000 locations in the U.S. alone. It is selling franchises since 1955 and the number of outlets keeps growing year-on-year.
Since, Dunkin Donuts is a well known brand across the world, to own a franchise needs substantial amount capital.
To buy Dunkin Donuts Franchise, you need to pay an initial fee of $40,000 to $90,000 depending on location and other factors and should have a net worth of at least $250,000, with at least $125,000 of that in liquid cash.
You can expect costs to be between $228,620 to as much as $1,691,200 for starting up a full-fledged Dunkin Donuts outlets. However, everything depends on location, country and various other factors when it comes to costs to open a Dunkin Donuts Franchise.
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