Starbucks Franchise Costs & Profits (2024)

Quick Summary

Starbucks, a renowned global coffeehouse chain, offers an unconventional approach for those wishing to run their own coffee shop. 

Born in Seattle in 1971, Starbucks has always prioritized the quality of its coffee and the ambiance of European coffeehouse culture. 

Unlike traditional franchises, Starbucks grows through company-operated stores and licensed partnerships, ensuring brand consistency and a unified customer experience globally. 

This strategy allows Starbucks to maintain control over its brand identity and operational standards. 

For entrepreneurs, this means engaging with Starbucks through avenues that align with its values and operational model rather than owning a franchise in the traditional sense.

Key Takeaways

• Starbucks maintains quality control by licensing stores to entrepreneurs instead of franchising, reflecting CEO Howard Schulz's vision for the brand.

• The company's selective licensing approach targets well-placed businesses in sectors that enhance Starbucks' market presence and foot traffic.

• Nationwide, Starbucks boasts 16,386 locations as of 2024, underscoring its dominant role in the U.S. coffee industry and its broad customer appeal.

• Opening a Starbucks location requires a significant investment, with initial costs averaging $315,000 and a requirement of $700,000 in liquid assets.

• Starbucks operators can earn between $50,000 and $200,000 annually, with revenues influenced by store performance and the number of licenses managed.

Table Of Contents

Is Starbucks A Franchise?

Starbucks avoids the traditional franchise model by retaining direct ownership of each store and licensing store opportunities to entrepreneurs. 

Starbucks opts for licensing its stores instead of franchising, a strategy shaped by CEO Howard Schulz's belief in maintaining a high-quality Starbucks experience. 

Schulz argues that the detailed aspects of offering Starbucks' services, from explaining the products to managing the look and feel of the stores, should be tightly controlled by the company itself. 

In addition, it’s important to note that Starbucks is selective in its licensing, favoring applicants with successful, well-located businesses that complement its brand. 

The company targets adding licensed Starbucks outlets to various sectors, including business centers, universities, fine dining establishments, government or military facilities, healthcare institutions, hotels, and travel or recreation areas, leveraging existing foot traffic and market presence.

How Many Starbucks Are There? 

As of 2024, Starbucks has significantly marked its presence nationwide across the United States, with an extensive network of 16,386 locations. 

With thousands of coffee shops spread throughout the country, Starbucks has become ubiquitous in the American landscape, offering its signature coffee beverages and café experience to millions of customers daily. 

This expansive reach highlights Starbucks' dominant position in the coffee industry and reflects its successful growth strategy and widespread appeal among coffee lovers. 

Starbucks continues expanding its footprint, further solidifying its status as a leading coffeehouse chain in the U.S. and worldwide.

How Much Does It Cost To Open A Starbucks? 

Opening a licensed Starbucks location involves a significant financial commitment, with initial costs averaging around $315,000. Prospective licensees are also expected to demonstrate $700,000 in liquid assets. 

These figures, however, are just the tip of the iceberg, as the total investment can fluctuate based on various factors such as the store's location, its size, and additional expenses that come into play.

The startup costs include

• Construction and build-out expenses

• Purchasing the necessary equipment and signage

• Stocking up on initial inventory

• Covering training expenses for staff. 

It's important to note that these estimates do not account for real estate costs, which can widely vary by location and significantly impact the overall investment.

Opting for a license with Starbucks allows you to operate a store at a specific location, differing from a franchise model where franchisees might have more control over business operations and product offerings. 

Licensed Starbucks operators must adhere strictly to the brand's guidelines, ensuring consistency and quality across all Starbucks locations.

How Much Does A Starbucks Operator Make A Year?

Starbucks operators enjoy a wide earnings spectrum, with annual profits ranging from $50,000 to $200,000 per location, influenced by store management and performance. 

On average, a Starbucks outlet can generate around $1.2 million in revenue, indicating that strict management and a solid business strategy can lead to substantial financial gains for an entrepreneur looking to operate a Starbucks location. 

Securing a Starbucks license for integration into venues like retail stores or bookshops instantly attracts a loyal customer base. The brand's strong loyalty ensures a consistent and dependable revenue stream, making Starbucks' operation potentially very profitable.

The number of licenses an operator manages significantly impacts their income. A single Starbucks license can yield over $120,000 in annual earnings, while operators with up to 20 licenses may see earnings soar beyond $2 million. 

This scale of income reflects the profitability and scalability of the Starbucks model.

Steps To Open A Starbucks Location

Interested parties must navigate a detailed licensing process to open a Starbucks location. Initially, candidates should visit the Starbucks website to register as potential licensees. 

This registration is followed by completing a comprehensive application, where you must specify the desired location for the new Starbucks outlet. 

Additionally, you must provide financial details, including information about their current cash position, assets, and liabilities. 

Applicants are also encouraged to include any extra information highlighting their proposed location's suitability for a Starbucks store. Once the application is submitted, the next step is to await a response from Starbucks regarding the approval of the licensing request.

Franchise Empire’s Thoughts

Starbucks has become a money making machine. They’ve executed brilliantly, and despite being on almost every corner, they make billions from selling their coffee in stores.

Owning an actual Starbucks just isn’t happening for you and I, and I’m not sure how they get away with operating under a licensing model as opposed to franchising.

They’ve become so iconic now and still have such a cult-like following, that I’m not sure even their up and coming competitors would ever be able to even remotely catch up to them.

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Disclaimer: This article is for informational and educational purposes only, and should not be considered as professional advice. We don't guarantee the accuracy or completeness of the information. It's not a recommendation or offer to buy or sell any financial products and doesn’t apply to specific personal circumstances. You should evaluate the risks and merits yourself before making any financial decisions based on this content.