Tech
How Starbucks Became An $80B Business
In its 47-year history, Starbucks has transformed from a single coffee bean store in Seattle to a 30,000 cafe international coffee power house. But massive expansion hasn’t come without growing pains.
It’s no secret that Starbucks has been struggling to get U.S. customers to frequent its cafes more often. While sales have been positive, the number of customer visits continues to stagnate.
Same-store sales, a key metric in the restaurant industry, have dwindled over the last 12 months as competition heated up and customers were uninspired by some of Starbucks’ limited-time offerings. While comparable-store sales exceeded expectations in the fourth quarter that ended Sept. 30, rising 4 percent, much of that was due Starbucks charging more for its lattes.
Under the careful watch of Howard Schultz, Starbucks pursued a strategy of aggressive expansion in the late ’80s and early ’90s. By the time the company went public in 1992, it had 165 stores.
Four years later, Starbucks opened its 1,000th location, including international cafes in Japan and Singapore. Growth was so rapid that, just two years later, Starbucks opened its 2,000th cafe.
While unit expansion helped boost sales throughout the last two decades — Starbucks has had positive same-store sales growth since 2010 — the company has now spread itself too thin.
With more than 14,000 locations in the United States alone today, Starbucks has cannibalized its own sales. The company is regrouping and rethinking its expansion. It is expected to shutter 150 underperforming locations in 2019, three times the amount it typically does.
Compounding its problems are changing consumer preferences, an issue CEO Kevin Johnson has addressed with investors. People are shying away from sugar-laden calorie bombs, which happen to be one of Starbucks’ staples. In 2015, sales of Frappuccinos were 14 percent of Starbucks revenue. However, in the first half of 2018, Frappucino sales were down 3 percent — and accounted for only about 11 percent of the company’s revenue.
Making matters worse, Frappuccino sales also were hurt by a lack of innovation, analysts said.
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How Starbucks Became A $80B Business
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Thermal batteries could be the next big thing in energy storage, and companies like Rondo Energy and Antora Energy are betting big on them. Instead of using materials like lithium, these systems store excess electricity as heat in things like bricks or graphite, reaching over 3,000°F. That heat can then power factories or even be converted back into electricity. Rondo, backed by investors like Bill Gates, is scaling quickly, aiming to produce enough thermal batteries by 2027 to cut 12 million tons of CO₂ emissions. While challenges like production growth and market adoption remain, thermal batteries could play a critical role in decarbonizing industrial manufacturing for products like steel and cement.
Chapters:
00:00 – The heat battery revolution
07:00 – Thermal battery startups
08:34 – What’s next
Credits:
Produced and Edited by: Lisa Setyon
Supervising Producer: Jeniece Pettitt
Narration: Magdalena Petrova
Production support: Magdalena Petrova, Erin Black, Shawn Baldwin
Camera: John Beatty
Animation: Jason Reginato
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How Thermal Batteries Could Replace Lithium-Ion Batteries
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It can be difficult for any business to succeed, but Black entrepreneurs have historically faced unique challenges. Despite, buy-black campaigns, grants, and other resources, 8 out of 10 Black-owned businesses fail within the first 18 months. So why do Black entrepreneurs continue to lag behind whites and other minority groups in terms of market share, and what will it take to keep them in business?
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