Starbucks Franchise Opportunity: What Are The Costs And Profit Margins
The restaurant industry is one of the industries that are always in demand. For would-be entrepreneurs, this is always an attractive opportunity, as food and drinks can be considered as a necessity. One of the most popular beverages and coffee chains is Starbucks. Let’s face it: almost everyone you know has to head out to their local Starbucks for their daily dose of caffeine.
Visit https://www.franchiseknowhow.com to learn more first about franchising before reading through below about everything you need to know about a Starbucks licensing opportunity.
Starbucks doesn’t offer franchising opportunities as of the moment.
As much as you would like to have your very own Starbucks coffee shop, the bad news is that, as of the moment, Starbucks doesn’t offer franchising opportunities. What they offer are licensing agreements. What does this mean? Compared to a franchise, you do not own the Starbucks branch. You hold a license to open the same. The Starbucks Company still owns the branch that you have a license to control and manage.
What is the arrangement going to be like? Because you are merely holding a license to operate a Starbucks branch, you are required to pay a monthly license fee to the company for you to rent its brand. Starbucks currently has around 13,000 branches across the globe, plus 14,000 more in licensed branches. However, the company is staying positive in the possibility of opening Starbucks up for franchising in the future.
Starbucks licensed stores still give you so many possibilities, as if you own the store itself.
Although you cannot own a Starbucks store, the closest you can get to having one is through the licensing agreements that they offer. To get a clear-cut estimate on the cost of licensing, it is best for you to ask the local Starbucks Company near you directly. However, you should expect that the inclusions of your licensing agreement would consist of the following, and will cost around a rough estimate of 350,000 USD:
- Store design
- Menu and equipment
- Training and support for your staff
- Whole beans coffee and other merchandise
- Exclusive food and bakery program
- Marketing strategies
Starbucks licensing agreements can serve you with a lot of advantages, too.
You may falsely think that because you are a licensee and not a franchise, you will be enjoying lesser profits or lesser advantages from pushing through with a Starbucks agreement. No, this thought is false. The licensing contracts of Starbucks can still serve you with numerous benefits as if you are a franchisee who owns the store. Starbucks’ CEO explained why, as of the moment, they had closed their doors to franchising.
Starbucks wants to maintain it’s coffee and employee culture strong, and this can be quite difficult with a franchising agreement, where you have more leeway in the management of the store. Most importantly, there is also a high focus on controlling the quality of the coffee and its process, and the customer service culture.
Starbucks continues to thrive as one of the most profitable coffee shops globally.
For some other coffee companies, there is quite a strict limitation as to where you should open a branch. However, with Starbucks, this isn’t the case. The company allows you to open a store in almost any location that you desire, for as long as it is profitable. Starbucks also adjusts its menu and design depending on where your store is located. For example:
- Shopping malls
- Stand-alone stores
- Gas stations
There is no way to deny this fact: a Starbucks licensing contract is quite an expensive one. Surely, you will find many other smaller coffee franchises that will cost you thousands of dollars less. However, this price tag is not without high benefits. Starbucks has been consistent in having increasing profit margins every year. The profit margin of a company represents that percentage amount that is kept as profit after all the other expenses have been paid for.
You do not need to be an expert in business for you to come to terms with the fact that yes, indeed, Starbucks is a profitable option. Take a look at your local Starbucks and see how many individuals often come to the same shop as regulars for their daily shot of coffee. In a fast-paced culture, Starbucks coffee has been regarded by many as its fuel for energy. The average earnings of a Starbucks shop in the United States, after satisfying all the expenses, is around 110,000 USD annually.
If you are a coffee lover, and if you really are dead-set on owning a Starbucks franchise, you may have to wait a little bit longer before this dream becomes a reality. At the moment, they aren’t opening the company up for franchising; however, the possibility remains hopeful in the future. The good news is that you can still save up more to afford this, or use you’re saved up investment for another business open for franchising so you can start earning more and be prepared for the time that Starbucks will give a resounding “YES!” to franchising.