Chartering Markets after the IPO; Lessons from Starbucks Inc.
On March 22nd, Starbucks celebrated its 25th anniversary since going public. It had its issuance on June 26th, 1992. Since then, the company has boasted an over 18000 percent return on investors’ capital. Further, Starbucks has paid out more than 10 billion dollars to shareholders through dividends and the firm’s stock repurchasing program in the last five years. It is quite clear that the company has grown to become very profitable especially now when most Americans love coffee and are willing to pay for it. Starbucks was at the head of this pro-coffee revolution and sought to profit from this niche. In its steps towards higher returns and expansion, it did what most firms do. Starbucks held an Initial Public Offering. However, not all companies reach over ten-fold returns for shareholder investments. So what did the company do that was so different/ We analyze the company’s issuance and the steps it has taken since then below.
- Consistent Expansion
Starbucks was started in 1971 in Seattle. According to the company’s history, it began as a coffee roaster and retailer in Seattle’s Pike Place Market. However, it grew year by year so as to cover different locations in the United States. Following its offering, the firm used the revenue it earned to open up new branches in other countries. Currently, Starbucks has over 2,200 branches in China, 1,418 branches in Canada and 1,160 retail shops in Japan.
Increased returns as a result of more branches and more capital from further share sales have also enabled the company to obtain affiliates. These include Ethos Water, Evolution Fresh, Hear Music, La Boulange Bakery, Tazo, Teavana and Torrefazione Italia. As a result, the firm has been able to maintain consistent profit.
During its inception, Starbucks had its primary product as coffee. With time, however, the company has included tea, baked products, smoothies and sandwiches in the snacks it sells. In line with its sale of a varied set of goods, Starbucks’ most recent inclusion is a gluten-free smoked Canadian bacon breakfast sandwich. The product was launched in the firm’s last shareholder meeting. It also plans to include grab-and-go sandwiches and salads on its menu, thereby serving the vegan community and broadening its clientele.
Since its offering, the company has consistently worked towards targets it brings up over time. The firm drafts and publishes its goals for each exercise and provides statements on them at the end of each financial year. Starbucks does this by updating the public about its progress through its Global Responsibility Report. In its recent shareholder meeting, the firm announced that it had already surpassed its 2013 target to 10,000 veterans or military spouses by 2018.
- Product improvement
Starbucks has also worked hard on improving its initial product, darkly roasted coffee. Apart from working towards better quality coffee being sold to consumers, it has improved its product delivery by better customer service. More personalized experiences at Starbucks have been cited as a primary reason why the company has a high rate of retaining customers. This was a fundamental principle for the firm’s success following the offering since it delved into broader markets from then.