Starbucks is one of the most recognizable brands in the world. Whether you’re looking for a quick pick-me-up or lingering over a cup of your favorite brew, Starbucks has become synonymous with quality coffee and drinks.
The coffeehouse chain has a massive presence throughout the United States and the globe – from its hometown Seattle to tens of thousands of locations in over 80 countries.
Considering Starbucks’ impressive track record of success, it’s no surprise that some aspiring entrepreneurs may be interested in starting a Starbucks franchise.
But does Starbucks offer franchise opportunities? And if so, what do you need to know before diving in?
In this article, we’ll explore the potential of owning a Starbucks franchise and break down all the details you need to know.
About The Starbucks
Starbucks is a world-renowned coffeehouse chain that offers an extensive selection of coffee and other drinks.
The company has become synonymous with high-quality coffee, friendly baristas, and a comforting, ambient atmosphere.
In fact, Starbucks serves over 60 million customers every week! The company’s international success is due in part to its commitment to quality ingredients and beverages and its highly trained baristas who are passionate about their craft.
From classic hot and cold beverages like lattes and cappuccinos to specialty drinks like the popular Frappuccino blended beverages and autumn staple the Pumpkin Spice Latte, Starbucks offers something for every taste.
The chain also offers a wide selection of vegan and non-vegan pastries, snacks, breakfast items, sandwiches, salads, and more.
With cozy seating areas, free Wi-Fi services, and inviting décor, Starbucks has become the third place between home and work, where people can come together to relax, grab a drink and connect with their community.
Starbucks History
Starbucks has a long and storied history. Founded in 1971 by Jerry Baldwin, Zev Siegl, and Gordon Bowker at Seattle’s Pike Place Market, the concept was inspired by entrepreneur Alfred Peet.
The name was taken from Herman Melville’s novel Moby-Dick, evoking the seafaring tradition of early coffee traders.
In the early 1980s, Starbucks was sold to Howard Schultz, who had just returned from a business trip to Milan.
Upon experiencing the Italian coffeehouse culture, Schultz decided to convert Starbucks into a coffeehouse serving espresso-based drinks.
From there, the brand saw aggressive expansion in Seattle before expanding further across the West Coast in the late 1980s and early 1990s. By the late 1990s, Starbucks had opened locations in Japan, Europe, and Canada.
Today, Starbucks operates over 32,000 stores in 80 countries around the world.
Throughout its history, Starbucks has followed a commitment to quality ingredients and beverages as well as providing an inviting atmosphere for customers to relax and connect with their community.
Starbucks franchise model
| Initial Investment | $228,620–$2,888,700 |
| Franchise | NO |
| Franchise Fee | N/A |
| Estimated Outlets | 32,000+ |
How Much Does It Cost To Open a Starbucks Franchise
Unfortunately, Starbucks does not offer franchising opportunities in the United States.
Instead, the company offers licensed stores to entrepreneurs interested in partnering with Starbucks.
As of 2023, approximately 40% of Starbucks stores in the United States are licensed.
Starbucks offers many services to help their licensees with designing, equipping, and opening their store, including menu design and implementation, training store staff on the Starbucks experience, and ongoing support with marketing materials and product innovation.
However, opening a licensed Starbucks store may not be the most affordable or accessible option for many entrepreneurs.
This is because you must have an already attractive location for a licensed store that Starbucks would want to be associated with, as well as the resources necessary to fund such an endeavor.
The total investment for a single licensed store could range from $228,620 to $2,888,700, depending on the size of the store and the complexity of equipment needs.
Additionally, an initial licensing fee of around $315,000 must be paid upfront before any other fees or expenses can be incurred.
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Is Starbucks A Franchise?
Starbucks does not franchise its stores but owns them all worldwide. However, they do offer licenses to individuals who want to own a Starbucks store.
These licenses function similarly to franchises and provide a means for entrepreneurs to operate under the Starbucks brand.
By obtaining a license, owners can benefit from Starbucks established brand recognition, as well as their operational and marketing support.
So, while not exactly a franchise, owning a licensed Starbucks store can be a lucrative business opportunity.
Why Doesn’t Starbucks Offer Franchising?
While franchising may seem like a straightforward way for Starbucks to expand its reach and increase profits, the company has elected not to offer it.
In Starbucks CEO Howard Schultz’s 1997 book, “Pour Your Heart Into It,” he explained why Starbucks doesn’t franchise.
Schultz believes that by allowing other businesses to become franchisees of the brand, they would be creating middlemen standing between them and their customers.
This would inevitably lead to a decrease in quality and customer service as those running the franchises wouldn’t necessarily understand or adhere to Starbucks’ vision and value system.
Additionally, Schultz feels that had they franchised, they would have lost some of their common culture that was so integral in creating an inviting atmosphere for customers.
He felt that the Starbucks experience could not be replicated without having the company’s own employees actively engaged in providing excellent customer service and passionate about their product.
Starbucks Revenue & Profit
Starbucks has experienced immense success over the years and has achieved impressive financial results.
In 2022, Starbucks reported total revenues of $32.914 billion, representing an 8.41% increase year-over-year (YOY).
The company reported gross profit for the same period at $22.313 billion, a 5.52% YOY increase.
As a testament to its success, Starbucks had an impressive operating margin of 10.51%, which is an indicator of the company’s ability to generate profit from its sales.
This also helps explain why the company doesn’t feel the need to offer franchising opportunities, as it has been able to steadily grow profits without doing so.
What Are Some Alternatives To Starbucks Franchise?
Starbucks may not be offering franchising opportunities at this time, but there are various other coffee franchises available.
Some of the most notable ones include Dunkin’ Donuts, Tim Hortons, and The Coffee Bean and Tea Leaf.
Here’s a closer look at each one:
Dunkin’ Donuts
Dunkin’ Donuts is one of the oldest and most successful coffee franchises in the United States.
Founded in 1950 by William Rosenberg in Quincy, Massachusetts, Dunkin’ has become a staple of American coffee culture.
With over 2000 estimated outlets worldwide and serving over 3 million customers daily, Dunkin’ Donuts is one of the most recognizable brands worldwide.
Unlike Starbucks, Dunkin’ Donuts offers franchising opportunities to entrepreneurs who are looking to capitalize on the success of an established brand and product.
The total investment range associated with opening a Dunkin’ Donuts location is between $121,400-$1,787,000, depending on whether you open a traditional or a non-traditional location.
Since its inception more than 70 years ago, Dunkin’ Donuts has created a loyal customer base by providing premium quality coffee at an affordable price point.
Tim Hortons
Tim Hortons is a Canadian chain of coffee shops specializing in fast food and hot beverages.
Founded by hockey icon Tim Horton in 1964, the chain has grown to become Canada’s most popular quick service restaurant, with over 4000 outlets across the country and 626 stores in the US.
Tim Hortons offers a variety of coffee and tea beverages, as well as breakfast sandwiches and other light meal options.
Just like Dunkin’ Donuts, Tim Hortons also offers franchising opportunities to entrepreneurs looking to open their own stores.
The total investment range associated with opening a Tim Hortons location is between $680,900 and $1,906,300.
The company also offers potential franchisees a comprehensive training program and ongoing support to help them get their business off the ground.
The Coffee Bean & Tea Leaf
The Coffee Bean & Tea Leaf is an American specialty coffee and tea retailer founded in 1963 by Herbert B. Hyman and Mona Hyman.
The company is headquartered in Los Angeles, California, and operates over 1000 self-owned and franchise locations worldwide.
The Coffee Bean & Tea Leaf offers a variety of hot and cold beverages, such as coffee, espresso-based drinks, tea lattes, smoothies, and more.
Like the other two franchises mentioned previously, The Coffee Bean & Tea Leaf also offers franchising opportunities to aspiring entrepreneurs looking to get into the coffee business.
The total investment range associated with opening up a The Coffee Bean & Tea Leaf location is between $338,100 – $977,850 and covers all aspects of setting up the business, such as construction, equipment, and supplies.
Starbucks Comparison
| Company | Starbucks | Dunkin Donuts |
|---|---|---|
| Year Founded | 1971 | 1950 |
| Franchise Fee | N/A | $40,000–$90,000 |
| Initial Investment | $228,620–$2,888,700 | $121,400–$1,787,000 |
| Number of Outlets | 32,000+ | 12,500+ |
Conclusion
Despite the massive success of Starbucks, the company does not currently offer franchising opportunities.
However, aspiring entrepreneurs interested in capitalizing on the massive business potential of owning and operating a coffee shop have several other options to consider.
Whether it’s Dunkin’ Donuts, Tim Hortons, or The Coffee Bean & Tea Leaf, each of these companies offers a unique set of products and services that can be used to create a profitable business.
FAQs
Does Starbucks Offer Franchising Opportunities?
Starbucks does not provide traditional franchises, as they own all of their stores globally.
However, if you want to own a Starbucks store, they do offer licenses, which operate similarly to a franchise.
Who Owns Starbucks?
Starbucks is owned by its shareholders, including The Vanguard Group, Inc., BlackRock Fund Advisors, and SSgA Funds Management, Inc.
How Much Does It Cost To Open a Franchise Similar to Starbucks?
The cost of opening a franchise similar to Starbucks varies depending on the company you decide to go with.
Generally, it can cost anywhere from $121,400 to $1,906,300 to open a franchise.
Amit Gupta is the founder of DrFranchises – a digital marketing agency that helps brands rank better on Google Maps through local SEO strategies. Amit has over 11 years of experience in digital marketing, SEO, email marketing, and social media marketing. He’s also the owner of multiple franchises and has helped countless brands achieve success online. When he’s not working, Amit can be found playing with his dog.