1. Why Did Starbucks Cross the Road? Yangming Liu, Laura Lukowski, Mark Longfellow, Anthony Marcello

2. How Many Stores Are There? As of November 2006: –7,102 company- operated outlets worldwide 5,668 in United States 1,434 in other countries –5,338 joint- venture and licensed outlets 3,168 in United States 2,170 in other countries –Total worldwide: 12,440 Beijing, China

3. Why So Many Starbucks? Long lines cause customers to leave Several stores in one area reduce long lines First discovered in Vancouver, 1990

4. Why So Many Starbucks? Customers do not want to travel far for coffee Will travel only a few minutes, 6-8 min. max Location matters: across the street or around a bend in the road A new store may take away sales from original, but will increase total sales overall

5. Why So Many Starbucks? Demand for specialty coffee is growing fast Adding stores only to keep up with demand Majority of Starbuck’s profits come from opening new stores in same area that has high demand

6. Why So Many Starbucks? To capture spur-of- the-moment customers If a customer sees a store nearby, may buy a cup of coffee even if they were not planning on it

7. Maintaining growth is key to keeping stocks high Opening new stores nearby is retail equivalent of basketball’s boxing out Expansion of Locations

8. Multiple size designs –Floor plans vary greatly in square footage –Small designs of 250 square feet (small stands inside bookstores, gas stations, or hotel lobbies) –Large designs of 1,600 square feet (typical size of a stand alone location) –Allows new stores in a wide variety of locations

9. Expansion of Locations Closely study real estate trends Large part of sales is dependent on spur- of-the-moment purchases Build in high traffic areas (malls, theaters, hotels, etc.) Customer work schedules

10. Starbuck’s Décor Arthur Rubinfeld –executive of real estate 80% of design was standard issue Focus on what costumers see

11. Starbuck’s Décor Stained wood front, plastic in back Dark color ceilings Regular floors Curtains and murals Sofas and soft chairs Round tables Every store is unique

12. Maintaining Interest Added drive-thru in 2004 Customized buildings for customers New stores on major highways and in smaller towns Additional bathrooms for travelers

13. Future Plans Open 10,000 new stores in next 4 years Open stores in lower-income, more diverse communities

14. Questions?