Starbucks: Business revival in recession
Starbucks Corporation, established in 1971, was named the “Number One World’s Most Innovative Food Company” by Fast Company in 2012. This was attributed to the company’s revival of its business during recession. This case study will examine how Starbucks was affected during the recession, the strategy used to pull the company back into profit, and the effects that this strategy had on the company.
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When Starbucks was first established it did not sell drinks; it was not until Howard Schultz bought the company in 1987 that it began to operate as a chain of coffee bars. The establishment of Starbucks as a coffee retailing chain marked the beginning of a new consumer trend.
Prior to 2008, Starbucks had been growing rapidly in terms of store openings, revenues, and operating profit. However, this all changed as the recession hit and the company struggled to cope. Starbucks became a victim of its own overexpansion. Furthermore, mass branding became detrimental to the company.
Starbucks embarked on a new strategy to turn the business around. The company shifted its focus from expanding the brand to enhancing the brand. A range of initiatives were introduced, including closing stores, expanding internationally, introducing new products and initiatives, and debranding stores.
Your key questions answered
- What difficulties did Starbucks fall into in recession?
- What were the causes of these financial problems?
- What strategy did the company use in an attempt to turn the business around?
- How successful was this strategy?
Table of contentsOVERVIEW
Starbucks established the first retail outlets of its kind
Howard Schultz transformed Starbucks
The new Starbucks format marked the beginning of a new consumer trend
The company expanded quickly
Other companies soon followed suit
Starbucks fell into financial difficulty
The recession had a negative impact on the company
Starbucks grew too rapidly
Starbucks embarked on a new strategy to turn the business around
The company closed underperforming stores
The company embarked on global expansion
The company increased its prices
Starbucks used innovation as a strategy for growth
The company has renewed its focus on quality
Many Starbucks stores were effectively debranded
The company has utilized corporate social responsibility strategies to improve the brand image
The company’s strategy helped to propel it back into growth
Operating profit for the company returned to growth in 2009
The brand value of the company has increased
A range of initiatives improved the fortunes of the company
The company plans to focus on Europe in the future
Related research categories
By company: Starbucks Corporation
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