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Starbucks BLM&P Research BLMP Research BLM&P Research Starbucks BLM&P Research BLMP Research • Lourdes Becerra • Brian Litke • Kari McLean • Rebecca Prindable BLM&P Research Decline in Sales BLM&P Research Second Quarter 2009 Fiscal Highlights Apr. 29, 2009-- Starbucks Corporation (NASDAQ: SBUX) today reported financial results for its second quarter ended March 29, 2009. Net revenues of $2.3 billion, a decrease of 7.6 percent • Comparable store sales of negative eight percent; compared to negative nine percent in Q1 2009 • Cost reduction of approximately $120 million versus target of $100 million • EPS of $0.03; Non-GAAP EPS (excluding restructuring) of $0.16 BLM&P Research Starbucks Problem • Decrease in: • profit margin • drop in sales BLM&P Research Historical Financials & Employees Income Statement Year Revenue Net Income Net Profit Employees ($ mil.) ($ mil.) Margin Sep 2008 10,383.0 315.5 3.0% 176,000 Sep 2007 9,411.5 672.6 7.1% 172,000 Sep 2006 7,786.9 581.5 7.5% 145,800 Sep 2005 6,369.3 494.5 7.8% 115,000 Sep 2004 5,294.2 391.8 7.4% 96,700 Sep 2003 4,075.5 268.3 6.6% 74,000 Sep 2002 3,288.9 215.1 6.5% 62,000 Sep 2001 2,649.0 181.2 6.8% 54,000 BLM&P Research Decline in Sales BLM&P Research Decline in Sales BLM&P Research Coffee Market Overview • 54% of US adult population are coffee consumers1 • Americans drink more than 488 million cups of coffee a year2 • US coffee drinkers spend on average $164.71 per year on coffee3 • Average coffee consumption in the United States is 3.1 cups of coffee per day (NCA). Per capita, men drink approximately 1.9 cups per day; women drink an average of 1.4 cups of coffee a day (NCA)4 BLM&P Research Coffee Market Overview • 80% of coffee drinkers now make coffee at home with brand name coffee (not trading down to no-name brands)1 • McDonald’s McCafe beginning to dent Starbucks2 • 60% of Americans have scaled back on fancy/expensive coffee since June 20083 • 90% scale back to save money3 BLM&P Research Unemployment Rate BLM&P Research US Population Estimate as of July 1, 2008 242,933,996 women and men Ages 15-100+ Median age (years) 36.8 BLM&P Research Earnings BLM&P Research Starbucks Background BLM&P Research Starbucks Data • Founded in 1971 in Seattle’s Pike Place Market • Mission Statement: To establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles as we grow. • Guiding Principles: • Contribute positively to our communities and our environment. • Recognize that profitability is essential to our future success. • Starbucks Corporation's Common Stock is traded on NASDAQ, under the trading symbol SBUX. BLM&P Research Starbucks Stores • 4,500 stores in 47 countries • North America • Europe • Middle East • Latin American • Pacific Rim • Stand-alone stores • Kiosks • Inside retail stores • Also own Seattle's Best Coffee and Torrefazione Italia coffee brands* BLM&P Research Starbucks Consumer Data • Starbucks drinkers 29.1% single • 27.2% professional/management jobs BLM&P Research Starbucks Store Products • More than 30 blends of coffee • Tea • Bottled beverages (protein shakes, water, juice) • Pastries, fruit, sandwiches, cheese plates • Merchandise: • Coffee • Tea • Music CDs • Mugs BLM&P Research Starbucks Products in Grocery Stores • Coffee • Ice cream • Bottled frappucinos BLM&P Research Starbucks Cards BLM&P Research Starbucks Cards • According to official Starbucks fact sheet: Starbucks Card, a reloadable stored-value card, surpassed the $2.5 billion mark for total activations and reloads since its introduction in 2001. Due to its success in the U.S. and Canada, the Starbucks Card global program has been launched in other international markets, including Mexico, Hong Kong, Australia, Thailand, Greece and the United Kingdom. Other markets (Japan, Taiwan and Spain) have a stand-alone Starbucks Card program, specific to their market BLM&P Research Starbucks Cards BLM&P Research Corporate Social Responsibility BLM&P Research Corporate Social Responsibility • Hot cups use 10% recycled content • New Vivanno cold cups use 15% less plastic and emit 45% fewer greenhouses gasses in production than industry-standard PET plastic and are recyclable • Discount if you bring your own cup • Chemical-free organic and fair trade coffees • Starbucks(RED) • Ethos water BLM&P Research Corporate Social Responsibility • Measures annual greenhouse gas emissions • Encourages suppliers to adopt more environmental practices • Purchases renewable energy (20% in US and Canada) • Adjusts thermostats to reduce electricity usage • Water-efficient fixtures • Energy-efficient lights • LEED certification for Seattle Support Center • Recognized by the EPA as the Green Power Partner of the Year in December 2006 Developed the online Planet Green Game to educate players about climate change and every-day behavior change. BLM&P Research Employee Benefits • Part-time and full time employee’s qualify for comprehensive benefits packages that typically include stock options through “beanstock” • Also includes health, dental, vision and medical insurance for employees • “Partner markout” - each week employees are given one pound of coffee, one box of tea and other various other starbucks products free of charge BLM&P Research 2009 Expansion Plans Starbucks expects to add approximately: • 20 net new stores to global store base • 320 net new licensed stores internationally • 60 international company-operated stores • 65 net new licensed stores in the U.S. • (Net reduction of approximately 425 U.S. company- operated stores) BLM&P Research Third Place • Meeting Place • Business • Social • Study • Read • Music • Recorded • Live • WiFi BLM&P Research Social Media as of July 19th, 2009 • Official Starbucks page has 3,576,651 friends • On twitter the official Starbucks has 251,716 followers • Official itunes page to download CD’s, songs, playlists • www.marketingcharts.com ranked Starbucks as the 6th ranked social brand of 2008 BLM&P Research Major Competitors Independent coffee shops Locally-owned small chains BLM&P Research McDonalds BLM&P Research Business Overview • Operates hamburger restaurants • Leading global food service retailer • More than 31,000 local restaurants • In 118 Countries • Serves more than 58 million people each day • Engaged in the franchise business • Trade Symbol on Nasdaq MCD BLM&P Research Social Media • Launched Station M • Private networking site for more than 650,000 hourly employees • Used to post comments, photos, and participate in contests • United States and Canada • Registered on Facebook, MySpace, and Twitter BLM&P Research Social Media • Facebook - 5,857,595 • Facebook - 4, 316 • Twitter – didn’t see one followers • MySpace – Big Mac • Twitter 870 followers Chant off (Contest • MySpace – Profiles with Winner) MySpace Job the name McCafè Search BLM&P Research Corporate Social Responsibility • Nutrition and Well Being • High Quality Choices- develop menu offerings that provide a range of choices that meet needs and preferences and that fit in a balanced diet. • Consumer Friendly Nutrition Information- provide easier access to nutrition information • Communicate Responsibly- Continue to refine marketing and communication practices, particularly to children BLM&P Research Corporate Social Responsibility • Environmental Responsibility • Energy Efficiency- Find further ways to increase energy efficiency restaurants to save money and reduce environmental impact. • Sustainable Packaging and Waste Management- Continue exploring ways to reduce environmental impacts of consumer packaging and waste in restaurant operations. • Green Restaurant Design- Enhance current strict building standards to incorporate further opportunities for efficiency and innovation in the design and construction of restaurants. BLM&P Research Corporate Social Responsibility • Employment Experience • Respect - Create a diverse and inclusive culture where everyone feels valued and respected. • Commitment Enhancement- Continue to enhance employment value proposition to drive high levels of employee commitment. • Talent Management- Attract, develop and retain the most talented people at all levels. BLM&P Research Community Involvement • Ronald McDonald House & Children’s Programs • Partnerships and Sponsorships • Owner/Operation Involvement • Disaster Relief BLM&P Research Coffee Products • House Coffee (free refills on black coffee) • Iced Coffee • Caramel • Hazelnut • Vanilla • Regular BLM&P Research Beverages Espresso based coffees • Cappuccinos • Lattes • Mochas • Iced Lattes • Iced Mochas • Iced Premium Roast brewed coffee • Hot Chocolate BLM&P Research McCafé Beverages • 2006 McDonalds Introduced Premium Roast drip coffee • 2007 Introduced Iced Coffee and tested a full line of espresso-based specialty coffees in Select U.S. markets • 2009 McDonald’s launched McCafé Coffees • McCafé can be found in more than 10,000 locations • Tag line “McCafé Your Day!” BLM&P Research Third Place • Wi-Fi is found in more than 30,000 McDonalds restaurants world-wide • Connect with payment • Credit Card • Subscriptions • Prepaid Cards • Promotional Coupons (sometimes) BLM&P Research Locations • Airports • Gas Stations • Malls • Stand alones BLM&P Research Marketing • $100 Million • TV • Print • Radio • Out Door • Internet • Events • PR • Free Samples BLM&P Research In May 2009, McCafé espresso based coffees contributed to the increased sales of 2.8% for McDonald’s in the United States. • MCD: Stock Quote • $ 57.84 0.62 1.08% July 17, 2009 BLM&P Research McDonalds vs. Starbucks BLM&P Research Dunkin’ Donuts BLM&P
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