Cost of opening a Starbucks franchise in 2021

Cost of opening a Starbucks franchise in 2021

 

Can I have a cup of coffee please and make it hot! How often do you hear this? What is the cost of opening a Starbucks franchise that makes this possible in every county, borough, city, state or country? How many cups of coffee and tea can you say get drank everyday all over the world?  Every day, despite busyness, people stop over for a cup of coffee either on their way to work, during lunch break, taking a friend out or even on their way home from work or church. Has this question ever crossed your mind? What is the Cost of opening a Starbucks franchise? What has made Starbucks so popular and successful? How come you can almost always find one Starbucks shop at almost all corners of every street or in city centres and malls?

So in this post, we want to go beyond you enjoying your cup of coffee, but more so, enjoying the aroma and touch of the money that comes from doing a coffee business. Based on that, we will be looking at the cost of opening a Starbucks franchise in 2021, and we will achieve this by answering the following questions, as they will be the foundation upon which, we will build on.

  1. Why Starbucks
  2. What is a franchise
  3. Why do you need a Starbucks franchise
  4. Cost of Starbucks franchise
  5. How to set up your own Starbucks business
  6. How much can you make with Starbucks franchise

 

  1. Why Starbucks

Starbucks was founded by Jerry Baldwin, Gordon Bowker, and Zev Siegl, in 1971 and they opened their first store in Pike place market in Seattle. From that humble beginning, and many years after, Starbucks have built a brand and expanded all over the world, with over 25,000 shops and still counting.

With the phenomenal growth the company has achieved, they have succeeded in becoming very audacious in entering new markets by using the business model of franchising. The Franchising model has helped Starbucks to open over 800 stores in the UK for instance, with the plan to open over 1000 more stores in the UK in the next 5 years or so, partnering with franchise owners, which would not have been possible, if they were not using the franchise model, which is more like helping businesses profit from their brand, and at the same time, using other people’s money to expand their business, more like a win-win situation.

Starbucks though may have started as a coffee shop, but it has now expanded to include tea and snacks, which has held many glued, because of their special recipes and blend they represent.

  1. What is a Franchise

According to Wikipedia, “Franchising is based on a marketing concept which can be adopted by an organisation as a strategy for business expansion. Where implemented, a franchiser licenses its know-how, procedures, intellectual property, use of its business model, brand, and rights to sell its branded products and services to a franchisee. In return the franchisee pays certain fees and agrees to comply with certain obligations, typically set out in a Franchise Agreement”.

Generally speaking, a franchise business model is simply the process of riding on the shoulders of others to reach a business destination, with the assurance that the franchisee will not do anything that will be hurtful to the shoulder they are riding on.

  1. Why do you need a Starbucks franchise?

The question probably would have been, why will you not want a Starbucks franchise? Over the years, Starbucks has developed processes and have perfected the art and science of coffee making, thereby turning Starbucks into a billion dollar company, and this billions has trickled down to every partner and associates.

Starbucks fits perfectly into the picture of the American pie, and through the marketing concept of franchising, many people are right now cutting their own slice of the pie.

So back to the question of why you want a Starbucks franchise? The reason why you should want a Starbucks franchise is because of the successes it has achieved over the years by establishing the brand, which has helped her gain customer loyalty and more so, has in the process, become one of the most successful franchise coffee chain.

So building on this success formula and having a blend of business blue print, is a very good reason to want a Starbucks franchise, as wanting to start a coffee chain business from the scratch will be a very herculean task as it seems, if not done the Starbucks way.

Starbucks is known to provide excellent training and ongoing support for her new franchisee, so deciding to become one of her franchisee, will no doubt be a very good business decision, as you will be starting your business on the right footing with all legal safeguards in place, with guidance on marketing provided, they also help new franchisee develop store layout and financial planning as part of the franchise agreement.

A franchise with Starbucks will also give you the opportunity to benefit from over 40 years of experience of the company of providing spotless services and serving loyal customers all over the world. The question now is, why will you not want to be one, so you can enjoy these benefits?

  1. Cost of Starbucks franchise

The cost of opening a Starbucks franchise is very high, with minimum requirement of $500,000 liquid assets, hence not many people are becoming franchisees. Starbucks however have an easier option, which is getting a license. According to reports, the approximate cost of opening a Starbucks licensed store is in the range of $315,000 or more. The cost is not just for the cup of coffee or tea you will be selling, but it includes the expertise, experience, brand recognition and customer loyalty that comes with the name Starbucks.

Starbucks aside giving franchise to companies that have the financial muscle to meet up with huge franchising fee, they have resulted in adopting the model of licensed shops, where Starbucks simply rent out the shops to licensees who don’t own the shops as franchisees do, but they only pay licensing fees to Starbucks.

Even though the franchise fee could be such that many people can afford, but not everyone will eventually become Starbucks Franchisee, as they are only looking for individuals/companies that have passion for coffee and that also share their values. They are also interested in those who can provide excellent service and impeccable customer relations, so not just your money will get you approved as a franchisee.

Other key attributes they look out for before granting a franchise or license are individuals with awesome communication and leadership skills to run and manage the business of coffee, or rather, those who have what it takes to be immersed in the tradition of coffee.

So if you are interested in buying a Starbucks franchise, you must be ambitious and daring enough, so as to allow you fit in to their audacious goal of expanding into all communities, as they expect their new franchisees to open at least 20 stores within five years. Starbucks right now want franchise partners who are committed to this project of rapid expansion and building of relationship with communities. Do you fit the bill?

Steps on How to Acquire a Starbucks License

In order to get a Starbucks license, if you are confident that you meet the above requirements, you will have to follow this steps below.

* Visit the official Starbucks website https://www.starbucks.com  and click on apply for license.

* From drop down menu, click on Business description, choose the option that is related to you and click on submit.

* Then fill out a formal application, providing all requested information in the application form, and the more details with verifiable proof that you can provide, the greater your chances of getting approved.

* Submit the application, if you are satisfied with the information you have provided, as requested in the application, and wait for your application to be reviewed.

  1. How to set up your Starbucks Business

Starting a Starbucks franchise or license shops requires that you go through the legal process of firstly establishing your business by following these steps:

  • Get a name for your business
  • Register your business: You have to contact the company house to get the business registered, you can seek legal counsel to know the best legal structure for your business ( It is advisable to register as limited liability company)
  • Register for tax with the revenue board
  • Apply for necessary permits and licenses to run a business in your state
  • Apply for insurance cover
  • Open a business bank account
  • Write your business plan
  • Source for funding

According to a statement on Starbucks official website: “Franchising with us is not a one-time experience. From the dawn of your store, we will assist you in every aspect of the business from the store designs to the marketing strategies on running a successful Starbucks franchise. The store location is crucial to us as it is a deciding factor on our franchise approval. To make things easy, we will help you in choosing your site or in improving the location you have proposed to us. Moreover, you will get all the training that you need that will last for about a month. You will learn how to prepare the best coffee to serve to your customers. Lastly, we will provide ongoing support and live business consultation to keep your business afloat”.

You will not be able to enjoy all these benefits that Starbucks provides, if you don’t have a business in existence, so follow the above steps of getting your business registered and getting all necessary permits and licenses, so you can be rightly positioned to having Starbucks help you set up your shop and you will be running a profitable business in no time.

  1. How much can you make with Starbucks franchise?

There are no hard and fast rules on how much you can make by running a Starbucks shop or any other business, as this will depend on the location of the store, the seasons that are prevalent, the disposable income of the demographic and their lifestyle. For example, there is a high tendency that you will make more money during winter, than you will during hot summer, as people tend to drink more coffee to keep warm during winter, than they do during summer. Though it is not just heat or cold that will determine how much you will make.

There is no gain-saying the fact that there are huge benefits of becoming a Starbucks franchisee, as the brand and name recognition of Starbucks, will ensure that you don’t lack customers daily, and it is the additions of the cents and pennies from every cup of coffee or tea bought, that will make the difference, as they will be in continuous flow, as people don’t only drink coffee for the sake of it, but they derive an intrinsic value by associating with a successful brand.

More so, with the reputation of a company that have more than four decades of business experience with proven records of been one of the “Most Admired Companies” from Fortune in the years 2003-2015, to one of the “World’s Most Ethical Companies” from Ethispere in the years 2007-2015 and more so, as the “Retailer of the Year” from the Visual Merchandising and Store Design in 2013, amongst others, there is no doubt then that the brand will surely make you succeed and grow with the company, of your shop is located in a place where customers can easily walk in to for your hot cup of coffee.

So setting up and profiting from Starbucks franchise is comparatively easier than nurturing your own business, as with their years of experience, much of the ground work has already done for you. So if your application to become a franchisee or licensed shop owner is approved, you will have the privilege of using the company’s existing operating system as well as its branding, trademarks and benefit from its worldwide marketing campaigns.

Final thoughts

At the beginning we set up to answer the question of the cost to opening a Starbucks franchise, which we are confident to state that the information we have provided here has justifiably answer the question. But the issue right now is not if the question has been answered or not, but rather if you are willing to use the information you have gleaned here to take the most important decision of your life by securing a Starbucks franchise or license.

Are you willing to take the bold step? Are you willing to go beyond just enjoying your cup of coffee? Are you sure you can handle the smell of money that coffee brings? Then prove it with your action today?

What are your thoughts with regards to this practical guide and is there any business idea you want us to write about? Let us know in the comment section.

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