Swot Analysis Of Starbucks

1427 WordsOct 27, 20176 Pages
Starbucks, unlike other American restaurant chains, typically favor one of two business models: the standard retail business model or the license model. To this day, most of Starbucks net revenue is generated by the retail locations the company owns. Starbucks targets highly populated areas with large volumes of foot traffic. Additionally, Starbucks is accommodating globalization by loosening its licensing agreement requirements, and using pieces of the franchise model to rapidly expose itself to developing markets’ share. For the last five years, Starbucks’ balance sheet is keeping steady with the changing markets and new store openings. Starbucks’s total current assets rose from $2.1 billion in October 2016 to $2.7 billion as of July of…show more content…
As more customers attach food items to their beverage orders, Starbucks increases total sales per store, which means the fixed costs account for a smaller percentage of sales, driving down cost of sales as a percentage of revenue. As the company leverages more fixed costs and attaches more food items to beverage sales, the overall profit margin should continue to improve for GAAP and non-GAAP. There are more initiatives as well as just the two mentioned, which are having a huge impact on the bottom line; so why isn’t Starbucks stock doing better? Starbucks shares have lost ground in 2017 even as the broader market soared. As a result, investors can purchase Starbucks for about 28 times last year 's earnings, compared to a P/E (Price -Earning) ratio of over 35 in early 2016. Yet, Starbucks is still growing -- just at a weaker pace than the company had expected. Despite having projected confidence that sales would rebound in the second half of fiscal 2017, executives in July were forced to lower their revenue and sales projections. “Rather than growing at a 10% pace, Starbucks is on track to boost

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