Founded in 1971 by Jerry Baldwin, Zev Siegl, and Gordon Bowker at Pike Place Market in Seattle, Washington. Then it was sold to Howard Schultz, who decided to make the coffee bean store a coffee shop serving espresso-based drinks. Today, Starbucks is the Number One coffee shop chain in the world that is popularly known for its darkly roasted coffee. Starbucks is the largest coffeehouse company in the world, with 32,938 retail locations as of the first quarter of 2021, followed distantly by coffee shop chains such as Dunkin Donuts with about 10,000 restaurants, Tim Hortons with 4,300 outlets, and Costa Coffee with nearly 1,700 stores worldwide.
Starbucks has spread its reach all over the world with 32,938 locations spanning 79 countries and territories on six continents. Yes, there are 195 countries in the world today, which means that many countries do not have a single Starbucks coffee shop. However, Starbucks is still growing.
Starbucks is not the largest retail supplier of coffee. That title goes to Folgers, which was the leading brand of regular ground coffee in the United States in 2020 by a wide margin. The brand produced sales in excess of one billion U.S. dollars, double that of its next closest rival, Starbucks. And, Folgers do not incur the cost of owning their outlets, and they only have 1,200 employees, versus the 349,000 employees at Starbucks.
Starbucks' sales depend on foot traffic and customers purchases. However, an average Starbucks averages $540,000 in revenue annually, with an average profit of $178,200 per year according to a US national study. These are estimates based on an average Starbucks. A busier location can make a higher number of sales than these figures.
At the time of this writing, the average price of a coffee at Starbucks in the USA was $2.75, but that doesn't mean much to the person who is buying a cup in Moscow, where they pay the equivalent of $12.30 for a tall latte. But, don't think that Starbucks gets to keep much of the difference in what you pay for that cup of coffee. There is a lot that determines the price of a cup of coffee beside the corporate margins.
There are many factors that are outside of Starbucks control including:
- The daily price of coffee, milk, and other ingredients
- Price of real estate per location
- Cost of labor
- Local business taxes
- Shipping and import taxes
- Global warming and weather changes
The wholesale price of coffee weighs heavily on the price you pay for a cup of coffee. The following chart shows the wholesale price for a pound of coffee in the year preceding September 2021.
Arabica coffee futures on the International Coffee Exchange traded at $2.10 per pound in July of 2021, close to levels not seen since end-July amid production shortfalls in Brazil and export disruptions in Vietnam caused by Covid-19 outbreaks and container shortages. Brazil’s total coffee harvest this year is set to post its biggest yearly decline since 2003 due to extreme weather conditions. Global coffee consumption is expected to exceed production in 2021 for the first time since 2017, according to the USDA. So, the price of a coffee at Starbucks may be going down slightly in some locales.
The Cost of a Starbucks Coffee
But just because all of the Starbucks stores feature the same sizes and menu items doesn't mean they have the same prices. The cost of a Starbucks coffee varies not only among the sizes and different drinks on the Starbucks menu but also with the country in which you're grabbing that Frappuccino. As a pioneer in cafe consumerism in America and abroad, Starbucks Coffee Company is commonly known as one of the world's more expensive coffee chains. All prices below are in USD.
The USA has the lowest price for a Starbucks Coffee. And, there is no wonder, as in the USA approximately half of the population drink coffee on a daily basis. The average price of a Starbucks drink in the USA is $2.75, but New York City is the most expensive location coming in at $3.25. And if you go for a decadent seasonal beverage with all the bells and whistles, it can run you over $5.
In Cuernavaca, Mexico with a high cost of living for Mexico, a tall latte is only $3.45. And, a Pumpkin Spice tall latte is only $3.94
Starbucks prices are slightly higher in other English-speaking countries than in the U.S. In the UK a tall latte averages $2.88. In Australia, Canada, Ireland, and New Zealand you will pay about $2.85 for a tall latte.
You will pay about 1.75 times the USA price in Columbia where a tall latte costs $5. In Brazil, expect to pay over $3.75 for a tall latte.
Prices are high in many parts of the Middle East and Northern Africa, including Saudi Arabia, Egypt, and the United Arab Emirates. A tall latte will set you back over $7 in Saudi Arabia, over $5.60 in the UAE, and over $7.50 in Egypt.
If you are traveling to Europe you can expect to pay more. Paris can boast they have the lowest price in Europe for a tall cappuccino at $4.41. A cappuccino in Belgium, Norway, and Sweden costs about $5. In Germany and Switzerland, a cappuccino will cost you a bit over $6.
Highest Starbucks Prices
In China, Indonesia, Malaysia, Thailand, and Vietnam a tall latte is over $7. But, Russia tops the list of ridiculously overpriced Starbucks coffee at $12.30 for a tall latte.
According to financial analysts, even with a lower cost of living in some of the countries and a lower infrastructure cost, the exorbitant prices are higher because Starbucks has positioned itself as a luxury brand, with more elaborate, high-end coffee houses, and of course relying on how those countries tap into the culture of USA affluence. In these countries the coffee chain is seen as exclusive and a sign of high status.