Starbucks Corporation $SBUX - A Valuation On 26th May 2021
The world's largest coffee shop company is brewing up a nice strong cup of steaming hot recovery. But, will systemic labour cost pressures derail their operating margin recovery?
The Story - Brewing a recovery.
Starbucks is a global coffee shop chain based in the US. It was founded in 1971 by a group of friends who wanted to sell roasted coffee beans. In 1987, Howard Schulz, an employee, bought the company and launched an aggressive expansion program.
Schulz rapidly increased the number of domestic stores and entered new markets overseas. This almost boundless dedication to expansion has helped the company double its locations over the past decade. And, as of the end of 2020, there were 32,660 Starbucks locations worldwide.
While the stores are located all across the world, the products are typically the same. Coffee based drinks make up the most significant proportion of their sales (Durr!); however, teas, hot chocolates, smoothies, iced drinks and food products are becoming increasingly important.
Over the last decade, growth has been slowing, and margins have been improving. The company achieved a CAGR of 14.84% from 1997 to 2020, but this growth was a much mβ¦