How Starbucks Makes Money

The North America region and beverages make up biggest share of revenue

Reviewed by Eric Estevez

Starbucks (SBUX) has grown from a Seattle coffee shop into the world’s dominant coffee chain over five decades by roasting, marketing, and selling specialty coffees and an ever-expanding assortment of other beverages, food, and branded products.

These products are sold in more than 38,000 Starbucks stores around the world. It boasts that its beverages and other products are also available in more than one million supermarkets, convenience stores, airports, and hotels in 80 countries. But the company-owned stores in North America still deliver most of its income, accounting for nearly 90% of all revenue in its 2024 fiscal year.

Key Takeaways

• Starbucks sells beverages, food, and other items in 80 countries.
• The company’s sales are primarily derived from its North America segment.
• Starbucks focuses on international expansion and new products for future growth.

Starbucks’ Financials

Starbucks’ primary competitors are other specialty coffee shops. While Starbucks dominates the U.S. market, it faces increasingly tough competitors in international markets, including U.K.-based Costa Coffee, a subsidiary of Coca-Cola (KO), and China-based Luckin Coffee (LKNCY).

For the 2024 fiscal year, Starbucks posted record consolidated net revenues of $36.2 billion, up 1% from the previous year. Its comparable store sales dropped by 2% both in North American stores and 4% in its international locations.

Starbucks announced a new growth push in November 2023 called the Triple Shot Reinvention with Two Shots. The plan included more efficient U.S.-based stores, continued global expansion, and more aggressive marketing of its Starbucks Rewards program. The company cited making “strong progress” in the initiative when it announced the creation of its geographic leadership structure in 2024 but made no distinct references to its financial viability.

Starbucks’ Business Segments

Starbucks breaks out quarterly earnings for its company-owned stores, licensed stores, and other, such as product sales through partner retailers. For the 2024 fiscal year, all three of those segments remained relatively flat from the previous year. Overall net revenues for the quarter were $36.18 billion compared to $39.98 billion a year earlier.

• Company-Owned Stores: Starbucks’ company-owned segment represents most of the company’s revenue and includes all its stores worldwide. Net revenue for 2024 increased slightly on a year-over-year basis from $$29.46 billion to $29.76 billion.
• Licensed Stores: Starbucks does not own all of the stores that use its branding. Its licensed stores are a relatively small segment, bringing in $4.51 billion in 2024, which is relatively flat from the previous year.
• Other: This segment includes its branded products, packaged coffee, and ready-to-drink products sold in supermarkets and convenience stores. Revenue for the segment was down in 2024 from 2023 by 4.8%, bringing in $1.9 billion compared to $2 billion.

Starbucks’ Recent Developments

The company announced a new leader after Laxman Narasimhan stepped down as chief executive officer (CEO) and as a Starbucks board member. Brian Niccol took the reins as the new chairman and CEO in September 2024. He was formerly CEO of Chipotle, the Mexican food chain.

As noted above, the company announced a new leadership structure under its global brand in 2024, including:

• Michael Conway, who was appointed as CEO of Starbucks North America
• Brad Brewer, who was appointed as CEO of Starbucks international
• Belinda Wong and Molly Liu, co-CEOs of Starbucks China

Note

Howard Schultz, the company’s founder, remains chairman emeritus.

Unionization

Starbucks has been involved in hundreds of labor disputes over its attempts to prevent the unionization of its retail employees.

In early October 2024, the National Labor Relations Board ruled that then-CEO Howard Schultz made an unlawful and coercive threat when he told employees at a 2022 company event, “If you’re not happy at Starbucks you can go work for another company.”

In June 2024, the U.S. Supreme Court ruled in favor of Starbucks in a suit brought by seven employees who were fired because of their pro-union activities.

Note

Employees at more than 500 Starbucks locations nationwide are unionized to date.

How Starbucks Reports Diversity & Inclusiveness

As part of our effort to improve the awareness of the importance of diversity in companies, we offer investors a glimpse into the transparency of Starbucks and its commitment to diversity, inclusiveness, and social responsibility.

We examined the data Starbucks releases to show you how it reports the diversity of its board and workforce to help readers make educated purchasing and investing decisions.

The company’s 2024 U.S. Workforce Demographics report indicates that 23.6% of its regional retail store vice presidents and 17.9% of its regional directors are Black, as are 11% of its district managers and 8.2% of its store managers.

It says 53% of its regional vice presidents are female, as are 50% of its regional directors, 60% of its district managers, and 67.4% of its store managers.

As of December 2024, the Starbucks board of directors had 10 members, three of whom are women.

What Companies Are Starbucks’ Biggest Rivals?

Starbucks’ biggest rivals are McDonalds, Dunkin’ Donuts, and Tim Hortons. That’s that coffee shop trade. Starbucks also is the top brand in packaged coffee, followed by Keurig Dr. Peppar Snapple Group, which sells the Green Mountain brand, and Lavazza, the family-owned Italian coffeemakers.

Is Starbucks a Fairtrade Coffee Company?

Starbucks is not a member of any of several fairtrade organizations that support farmers and their communities. However, Starbucks maintains its own Farmer and Coffee Equity (C.A.F.E.) practices that verify that the sources of its coffee adhere to high standards of workers’ rights, water conservation, and biodiversity.

Where Did the Name Starbucks Come From?

You’ve never read Moby-Dick either? Starbuck was the name of the first mate on the ship Pequod in Herman Melville’s classici novel. According to company lore, the founders chose the name because it evoked a sense of adventure.

The Bottom Line

Starbucks is in the midst of a growth plan that it calls its Triple Shot Reinvention with Two Shots. The plan has three focal points: cutting costs in its U.S.-based stores, expanding the reach of its Starbucks Rewards program, and opening more stores internationally.