Can You Finally Open a Starbucks Franchise in 2022? (Cost and Analysis)
For years, it’s been almost impossible to start a Starbucks franchise. But will this year be different with their Brand License opportunity? If you’re looking to franchise a Starbucks, you’re unfortunately out of luck. However, here are some alternatives to getting into the coffee business.
Entrepreneurs that are interested in starting a location with a popular, nationwide franchise occasionally wonder about or ask about purchasing a Starbucks franchise.
After all, franchising is a tested strategy for business expansion and revenue. Brands like McDonald’s, KFC, and many others has used for many years the idea.
However, prospective franchisees who are eager to start at Starbucks might discover that nothing is in the works.
About Starbucks
Starbucks is regarded as the biggest coffee chain in the world. What began as a little coffee shop in Seattle has expanded into a global company with 70 million devoted customers, both young and elderly.
Founded in 1971, the Starbucks Corporation is a global chain of coffee shops. Starbucks has over 30,000 outlets worldwide, making it the largest coffeehouse chain in the world.
Potential investors frequently look up how much Starbucks franchise costs, but they use a different business plan.
Why it isn’t Possible to Franchise a Starbucks
Franchises are not offered by Starbucks Coffee. Despite the fact that franchising has been a tried-and-true method of expansion for countless popular, well-known firms, Starbucks does not currently offer franchises.
It’s not because franchising isn’t a tried-and-true growth strategy. Numerous businesses provide franchises.
In other words, the franchisee operator contributes capital to the business in exchange for a return on their investment.
The franchise system, which allows businesses like McDonald’s and Subway to expand by opening more stores, is effective.
Unlike franchises, Starbucks does issue permits for sites inside hospitals, institutions, and other establishments. The firm does not, however, permit Starbucks store sites to be franchised.
The Price of Starting a Starbucks Franchise
The bad news is that this idea is still not franchisable. In other words, Starbucks wants to protect and maintain the caffeinated environment and the level of service they offer.
They contend that the franchise model can erode consistency and quality.
A Snippet of Starbucks History
It was founded in 1971 by Jerry Baldwin, Gordon Bowker, and Zev Siegel, who also opened the original location next to Seattle’s famed Pike Place Market.
The famous book by Herman Melville’s character Moby Dick’s first buddy inspired the name Starbucks. The company Starbucks is owned by the company Starbucks.
Howard Schultz can be referred to as Starbucks’ “owner” given he is the majority shareholder of the business. Schultz was appointed director of retail and promotions for the Starbucks Coffee Company in 1982.
Before returning to Starbucks in August 1987 with a group of investors, he briefly quit the company to launch his own coffee company, the II Giornale Coffee Company.
Starbucks Franchise Fees and Financial Requirements
The following list of approximations for these fees:
As was already mentioned, there are major costs and asset requirements for licensing a Starbucks location.
| Fees/Expenses | Financial Amount |
| Liquid Assets | $700,000 |
| Licensing Fee | $315,000 |
Simply said, the definition of a liquid asset is cash on hand. You have this much money available to you, which you can use immediately. A liquid asset is anything like cash in a savings account or stock holdings.
Once more, Starbucks does not permit the franchising of their stores; therefore, if you are interested in licensing their coffee shop, it is best to contact Starbucks directly.
Before approving you as a licensed operator of their brand, you must fill out a form and have your qualifications evaluated.
Annual Sales / Revenue Average for the Starbucks Franchise
The average annual revenue for Starbucks over the last five years has been $23.69 billion. They are the best coffee shop in the world because of this.
Despite the pandemic having a negative impact on their sales in 2020, their sales were still increasing over the previous five years, according to their statistics.
As the business expands further into significant international markets like China, we anticipate that this growth tendency will continue.
Similar to a loyalty punch-card scheme, these prizes, or stars as they are known inside the app, can be swapped for gratuitous menu items.
Although Dunkin’ Donuts and Costa Coffee are regarded as Starbucks’ rivals, their annual average sales (Costa Coffee: £1.34 billion; Dunkin’ Donuts: $1.37 billion) are significantly lower than Starbucks’.
However, if you want to start a coffee business, these can be good options to consider.
Facts About Starbucks Franchise
Seattle, where the business was founded, is home to Starbucks’ primary administrative offices. Even so, Chicago is home to its biggest location, which has a rooftop deck, a cocktail bar, and more than five floors of baked delicacies.
Over 349,000 people work full-time at Starbucks globally.
Though they’re known for selling coffee, Starbucks also owns Evolution Fresh, their bottled fruit juices, and Ethos Bottled Water.
The name of the coffee shop was inspired by the first mate in Herman Melville’s book “Moby Dick.”
Seattle’s Best Coffee and the tea producer Tazo were two further well-known companies that Starbucks owned.
Kevin Johnson is the president and CEO of Starbucks as of the time of writing.
| Total Units | 32,646 |
| Incorporated Name | Starbucks Corporation |
| Franchising Since | Only open for licensing |
| Industry | Coffee Shop |
| Subsector | Restaurant |
Starbucks Brand License Benefits
We are aware that Starbucks cannot be franchised. But you can grant a place a license. Here are some benefits of choosing this path.
Individualized Store Design
Business News PH claims that if you are given permission to run a Starbucks, you can personalize the coffee shop to suit your tastes.
With Starbucks, you have more creative freedom than with other franchises where the corporate tightly dictates the layout or shop design.
However, that does not imply that your design can be completely original. You would still need to model your outlet on one of Starbucks’ 18-provided design studios.
Individualized Store Design
Business News PH claims that if you are given permission to run a Starbucks, you can personalize the coffee shop to suit your tastes.
With Starbucks, you have more creative freedom than with other franchises where the corporate tightly dictates the layout or shop design.
However, that does not imply that your design can be completely original. You would still need to model your outlet on one of Starbucks’ 18-provided design studios.
However, it still looks better than the uniform appearance of other corporate franchises.
Permanent Consultation
After you install an outlet, Starbucks won’t suddenly disappear. As consultations and support are offered, all of your worries will be addressed.
Working in a Starbucks shop might also be advantageous before spending money on a brand license. This will familiarize you with how a retail store operates on a daily basis.
Exclusive Equipment Package
When you license a Starbucks store, you may be wondering how you’ll know which coffee maker to utilize or what other equipment you’ll need.
That won’t be a concern for you because they will provide you access to the machinery that has already received their approval.
This keeps your shop consistent with the other coffee shops run under this brand.
Starbucks as a Trademark
Owning a Starbucks gives you an edge over other coffee shops, which is one of the main benefits.
The name of your store is already well-known. A customer base already exists for you. Starbucks has already prepared its aesthetics for you.
Along with the products and special seasonal offers like Pumpkin Spice Lattes, you’ll have access to the house coffee line.
Without needing to determine your brand, the majority of the store will be ready for business.
Starbucks Brand License Challenges
Like running any other company, running Starbucks has certain difficulties. To help you understand the challenges you might face if and when you decide to license a Starbucks, we’re here to break it all down for you.
Here are a few that you ought to be aware of:
Exorbitant License Fees
We’ve already discussed how much a Starbucks license would cost. In addition to the cost, you should think about having a liquid asset that Starbucks would consider to be worth enough to approve your application.
So, getting a Starbucks license can be challenging unless you’re already in charge of a huge, nationwide business.
Expensive Coffee Menu
It should come as no surprise that many people think Starbucks is pricey. Starbucks charges $2.25 for a tall (12-ounce) cup of iced coffee, whereas Dunkin’ Donuts charges $1.99 for a small cup (16 ounces).
Starbucks coffees are pricey for a variety of reasons. You think about where they’re situated, how well-known they are, how accessible they are, and how well-trained the staff is.
Starbucks may have a sizable customer base, which accounts for its continued success. However, there are many more who would rather purchase their coffee somewhere where it will be far less expensive.
Location
Even though Starbucks consistently picks the greatest locations, doing so has a cost. The rental costs would be high if it was located in a mall.
If it’s on an empty lot, you might need to rent some of it or even go through the legal processes to buy it before spending money to construct the coffee shop.
You will need to be concerned about more than just the licensing fee. Additionally, there are all these other costs associated with opening a Starbucks in your community.
Engaging the Public
There will always be difficulties if you work with the general public. One issue raised by Starbucks management is how to handle the restrooms at these coffee shops.
If you’re in a downtown area, Starbucks is frequently the only location to find solace. Starbucks often enables anyone—customer or not—to use its restrooms. On request, they also give away free cups of water.
These societal challenges at large will always be a topic of discussion.
Positioning of Starbucks in the Food and Beverage Sector
the food and beverage employs 13% of all manufacturing jobs in the USA sector. There are 1.46 million individuals working in this sector.
Up to 36% of all franchise businesses in the USA are in the food industry, and by 2027, 1.6 million new jobs are anticipated to be added.
A single restaurant’s EBITDA multiplier is around 3 times the industry’s average yearly growth rate of 2%. Coffee shops are a common first-time business purchase, and first-time franchise owners love this sector.
The learning curve is not as high because there is a wealth of material available on both basic business principles and details related to coffee shops.
Any business owner in the sector is expected to be educated on the specifics of coffee, current events, and beverages associated with coffee.
In Summary
Even though you can’t buy a Starbucks, starting a coffee business that can be an excellent Starbucks substitute in your area may be simpler than you think!
When deciding whether to license a Starbucks, be sure to consider your options and your financial situation.
Keep in mind that there are numerous alternatives to your coffee shop that are both successful and expanding quickly. You have a lot of choices.