Reacting to how Starbucks became a $80B business – Reaction Time 011

00:00 Introductions
04:02 How Starbucks started
05:48 Starbucks founder
08:05 Howard Schultz makeover
10:30 Starbucks customer experience
14:32 Frappuccino developed
16:18 Starbucks vs every coffee shop in the world
18:33 Business lessons from Starbucks
19:17 Comments
20:20 Conclusion

Martin Henley
Hello there, my name is Martin Henley. This is the effective marketing YouTube channel. If you’ve been here for a second, you will know that I am on a mission to help you to be more successful in your business. Now, the way I can help you to be more successful in your business is by giving you everything you could possibly need to know about your sales and your marketing.

Martin Henley
My reckoning is if your sales and marketing is working, then you will have money to fix all of the things that aren’t working in your business that I know absolutely nothing about. So I’m here giving you everything I know about sales and marketing, I’m pulling in anyone I can find with experience to support you to be successful in your business in the talk marketing series, we are bringing you the marketing news and we are reacting to the very best and the very worst of marketing content on the internet, which is what today is about. So today I will be reacting to a piece of content somewhere on the internet about marketing.

Martin Henley
There is an element of jeopardy to this because I’m not deciding what it is that I will be looking at. Clay has already put together the Claylist, which has a number of anonymous links. So I am going into this entirely blind to let’s have a look and see what Clay has for us today. So Clay has been busy. There are 12345678 links. I don’t know what any of them are. So I’m going to go in the middle. Okay, and what has come up is How Starbucks Became a $80B Business.

Martin Henley
Okay, so do I have a view on Starbucks? I don’t particularly have a view on Starbucks. I’ll be very honest with you. I’m not a coffee drinker. I haven’t drank coffee, I think for about 15, 16 Maybe 17 years, I think maybe it was 2005 that I stopped drinking coffee. It was 2006 completely by accident. I really enjoyed it. I really enjoyed the idea that I was a coffee drinker. What happened is I did a bike ride. And there was a huge queue for coffee on the first day. So I skipped it on the morning of the first day. Then there was a similar sized queue on the second day, and on the third day. And then by the time I was caffeine clean for three days, I no longer have felt the urge to be enjoying coffee. So I’m not a coffee drinker. So Starbucks isn’t a coffee thing for me. I have a mate he quite often likes to meet at Starbucks, and I’ll have whatever chocolate something hot chocolate, maybe mushroom day, I don’t know, quite like Starbucks.

Martin Henley
They were decrying the fact that they were Italians, they make coffee. You know, Starbucks are selling everything that the Italians sell, why aren’t they doing it and making all the money? So that’s it. I don’t really have a strong opinion on Starbucks. But Starbucks are an $80 billion business. So it might be interesting to find out how Starbucks became an $80 billion business. Let’s check it out.

Narrator
With nearly 30,000 cafes across the globe, Starbucks has become more than just a household name from its iconic cups often adorned with misspelt names to the espresso inside them. Starbucks has catapulted from one coffee bean shop in Seattle to a sprawling $80 billion business over the last 47 years. Starbucks sales account for 57% of the total Cafe market. Yes 57%.

Martin Henley
These brands are just eating it up on the How can like so more than one in two of all cafe business is Starbucks.

Narrator
Two thirds of all coffee sold at cafes in the US comes from a Starbucks. But this impressive expansion hasn’t come without growing pains. With more than 14,000 locations in the US alone Starbucks has spread itself too thin. Having too many stores has led to fewer transactions at individual stores to compensate the company raise prices. But doing this too quickly or too often can drive customers away. So how did this happen?

Martin Henley
Alright, so pricing is really important. Obviously, I spoke last week on the WTF series about pricing, how important that is. And if you’re increasing your prices, people don’t like it. They really don’t like it. And I think coffee is actually one of those things. What I want to say is it overpriced, just to have a huge margin, it has a huge margin. I think they make these coffees for literally, maybe 10%. I’ve got to stop saying literally, they make these coffees for about 10% of the price that they charge. So hugely profitable business. Obviously that’s not the total cost, there’s going to be rents, etc, etc. They’re on high streets, staff, etc.

WHAT DO YOU THINK?