The History of Starbucks

A Starbucks Store Front.

Starbucks is one of the companies that led the rise of the second wave of coffee in the United States.

The first wave occurred in the 1700s when people viewed coffee as only a commodity without highlighting its origins and culture.

The second wave, by contrast, started in the 1970s and introduced the culture of coffee by outlining its origins and differentiating the different beverage types.

Starbucks wanted its consumers to understand and appreciate coffee. There was no better way to do this than by highlighting its origins and making coffee drinking a more social experience through coffee bars.

Before Starbucks, most people bought coffee to go. But thanks to this corporation, coffee is now a commodity that brings people together through social encounters. Read on as we narrate the history of Starbucks from its early years to where it is today.

The Story of Starbucks

The Starbucks Corporation, popularly known as Starbucks, was founded in Seattle, Washington, at a time when most coffee retailers sold low-grade inexpensive coffee from a can.

The quality of the coffee was so poor that Gordon Bowker, one of the company’s founders, opted to source his beans from Vancouver, British Columbia.

His idea of coffee was a dark, delicious beverage made from high-quality beans roasted and brewed to perfection.

In 1971, Bowker teamed up with two other aspiring entrepreneurs, Jerry Baldwin and Zev Siegl, to start a company. They named it Starbucks. Legend has it that they based this name on one of the characters in the Great American novel, Moby Dick.

Bowker also thought that words starting with the letters “st” sounded more powerful, and thus the name “Starbucks” was a perfect fit.

The three founders formed Starbucks using $1,350 (contributed by each) and $5,000 (from external funding.) They opened the company’s first store at 2000 Western Avenue, Seattle.

Starbucks operated at this store from 1971 to 1976, then relocated to 1912 Pike Place, also in Seattle. The company sold only high-grade whole coffee beans, which they sourced from another company called Peet’s Coffee & Tea.

Starbucks did not, at the time, roast, brew, or sell coffee as a beverage. The only coffee they brewed was for sampling. In 1973, Peet’s Coffee & Tea stopped supplying coffee beans to Starbucks, and the company’s owner, Alfred Peet, offered to train Starbucks on how to roast coffee.

Within a decade, Starbucks had five stores and a small roasting facility in Seattle. The company also had a wholesale division that sold coffee beans to restaurants.

Siegel had already left the company in 1980. In 1982, Howard Schultz joined Starbucks to manage the company’s sales and marketing department, and would later change the course of Starbucks’ history.


Many people believe Howard Schultz is the founder of Starbucks. Schultz is, however, the founder of the company that acquired Starbucks.

In 1983, a year after joining Starbucks, Schultz took an all-expenses-paid trip to Milan, Italy, where he experienced a new culture of coffee drinking, different from that in the West.

Milan had espresso bars where customers could sit, socialize, and work as they enjoyed their coffee. Amazed by this concept, Schultz returned to the United States determined to introduce Italy’s coffee-drinking culture to the West.

Howard Schultz pitched his idea for coffee bars to the Starbucks founders, but they remained reluctant and unconvinced. As a result, Schultz left Starbucks to start his own business using the coffee bars concept. He named his entity Il Giornale.

Instead of selling coffee beans, Schultz wanted to brew specialty coffee that customers could enjoy while relaxing, socializing, or working at his coffee bars. He returned to Italy to learn more about the espresso bars and coffee culture, then created a business plan and scouted for investors.

Schultz left Starbucks on good terms with the company’s founders, and thus they were willing to invest in his new entity.

Together with funding from other external investors, Schultz opened his first coffee bar at Columbia Seafirst Center.

He then opened another bar in Seattle and the third one in Vancouver, Canada. In 1987, Il Giornale acquired Starbucks for $4 million.

This acquisition gave Schultz ownership over Peet Coffee & Tea, which Starbucks had acquired in 1984. His company also gained control over the Starbucks brand. Schultz then rebranded Il Giornale as Starbucks.

Business Strategies

After the acquisition, Starbucks changed its business strategy to focus on selling coffee as a beverage through espresso bars. The company targeted customers directly instead of retailing to supermarkets and other chain stores.

Schultz then devised a rapid expansion plan that saw Starbucks open 46 outlets by 1989, 165 by 1992, and 425 two years later. By the start of the 21st century, Starbucks had more than 2,000 stores in and out of the United States.

Starbucks expanded not only by opening new outlets but also by acquiring multiple businesses and enlarging its product line.

The company purchased its rival, Coffee Connection, in 1994 and converted this company’s 23 stores into Starbucks outlets.

This acquisition also granted Starbucks rights to Frappuccino, a blended iced coffee beverage that eventually became one of Starbucks’ most significant successes.

By the end of the 20th century, Starbucks was selling not only specialty coffee but also freshly roasted coffee beans, tea, spices, pastries, espresso machines, and music CDs.

Competitive Advantage

Unlike many coffee and restaurant chains that expand through franchising, Starbucks never franchised.

Howard Schultz wanted to maintain control of the quality of Starbucks’ products and customer service.

He feared franchising might dilute the company’s values and culture and thus result in low-quality coffee. Starbucks invested heavily in sourcing high-quality Arabica coffee beans and rigorously trained its baristas on how to brew and serve coffee to customers.

Rather than franchising, Starbucks preferred granting licenses to hospitals, colleges, airlines, and other businesses that wanted to serve its coffee.

The company also chose where the licensed outlets would be located and offered training, guidance, and support until they embraced Starbucks’ values and culture.

By 2017, Starbucks had close to 5,700 licensed outlets out of 13,930 in the United States. By not franchising, Starbucks managed to maintain the quality of its products and the culture of its brand.

Marketing Strategies

Starbucks didn’t invest much in advertising in its early days. The company relied on free sampling to get customers to buy its coffee beans.

After the acquisition, Starbucks shifted its marketing focus to word of mouth from loyal customers.

The company also chose the best strategic locations to ensure they attract target customers, middle-aged men, and women with a higher income or purchasing power.

Starbucks prices its coffee slightly more expensive than most competitors.

Despite the higher prices, Starbucks invests heavily in making its coffee as high quality as can be. The company purchases only high-quality Arabica beans that grow in high-altitude areas.

Roasters undergo rigorous training on roasting the three main types of roasts found in Starbucks coffee (blonde, medium, and dark). Baristas also receive training in not only coffee brewing but also customer service.

Howard Shultz focused on making his coffee bars “the third place,” meaning a place that wasn’t home or work. He wanted his outlets to be a place of solace and comfort, so he offered free Wi-Fi and classic jazz music.

Customers loved the soothing tunes so much that Starbucks ventured into the music industry.

Starbucks Setbacks

Starbucks faced a setback in 2008 due to the economic crisis in the United States. The company shut down 600 unprofitable outlets and another 300 in 2009, thus laying off approximately 6,700 employees.

By this time, Howard Schultz had already stepped down as chief executive officer to become chairman.

The financial crisis caused most Starbucks customers to shift to cheaper alternatives. The company was also amid a rapid expansion plan, and thus the economic crisis couldn’t have come at a worse time.

Howard Schultz returned as CEO, and his first action was to shift the company’s focus back to customers. He introduced My Starbucks Idea, where customers could air their opinions and communicate directly with the Starbucks head office. Starbuck eventually recovered and got back to profitability.

Lessons Learned From Starbucks

We can learn many lessons from the story of Starbucks, but the one that sticks out the most is how you should strive to maintain the culture and values of your entity.

Despite expanding to more than 33,000 outlets in over 80 countries, Starbucks’ culture has remained the same.

The company still focuses on excellent customer experience and high-quality coffee. Starbucks values its corporate culture so much that it rejects all franchising opportunities for fear that this expansion method may dilute its culture.

It’s easy to uphold the values and culture of your entity when it is small, but as your business grows, dedicate your time and resources to maintaining and protecting your organization’s culture.

Otherwise, you might end up with some stores or departments having a different culture from the rest.

Your company’s culture should be visible in every aspect of your business.


Starbucks Timeline


Starbucks gets established by Jerry Baldwin, Zev Siegl, and Gordon Bowker.


Starbucks stops purchasing coffee beans from Peet’s Coffee & Tea. Alfred Peet trains Starbucks to roast coffee.


Starbucks relocates from 2000 Western Avenue to 1912 Pike Place, Seattle.


Zev Siegl leaves Starbucks.


Howard Schultz joins Starbucks as the director of retail sales and marketing.


Howard travels to Italy and returns with an idea for coffee bars.


Starbucks acquires Peet’s Coffee & Tea.


Howard leaves Starbucks to start his own entity based on the coffee bars idea he observes in Italy.


Howard Schultz establishes Il Giornale.


Il Giornale acquires Starbucks for $4 million. The company changes its official name and branding to Starbucks.


Starbucks offers medical and dental health benefits to full-time employees.


Starbucks opens a stock option program for full-time and part-time employees.


Starbucks goes public and is listed on the NASDAQ stock exchange.


Starbucks builds a roasting plant at Kent, King County, Washington.


Starbucks opens its first drive-thru location. The company also purchases Coffee Connection and acquires the Frappuccino brand.


Starbucks opens stores in Japan.


Starbucks establishes The Starbucks Foundation.


Starbucks opens outlets in Europe.


Starbucks opens stores in China. The company also buys Tazo Tea.


Howard Schultz steps down as CEO of Starbucks. Orin Smith becomes CEO.


Starbucks acquires Seattle Coffee Company.


Starbucks opens its first Farmer Support Center in San Jose, Costa Rica.


Orin Smith steps down as CEO of Starbucks. Jim Donald becomes CEO.


Starbucks launches the company’s first recyclable paper beverage cup.


Howard Schultz returns to Starbucks as CEO.


Starbucks opens an East Africa Farmer Support Center in Kigali, Rwanda.


Howard Schultz retires as CEO of Starbucks.


Howard Schultz returns as interim CEO of Starbucks.

Starbucks Executive Team

An overall look at a company wouldn’t be complete without looking into the people managing it.

If you’re interested in the executive team running Starbucks, the link below offers an overview of the current and past team members.

Of course, if you want, you can always dig deeper into each team member if you’re interested.

Search Results – Executive team of Starbucks.

Working at Starbucks

How a company treats its employees strongly indicates its management team’s skills. So it’s essential in business to keep costs down as much as possible without affecting quality.

A company’s workforce and front-line workers are an essential part of a company, and this is an area where cost must be regulated but not to the point where it affects your workforce or the quality of service.

See the link below for the latest search results for an overview of working at Starbucks.

Search Results – Working at Starbucks.

Starbucks Complaints and Lawsuits

If you look at complaints and lawsuits, you can understand how strong the management team is. Naturally, you will find posted customer complaints, but for those, you have to look at how credible they are.

Some people want to vent, while others have legitimate complaints.

The link below offers the latest and most popular resources for lawsuits and complaints against Starbucks.

Search Results – Complaints and Lawsuits related to Starbucks.

Starbucks Financials

Whether you plan to invest in Starbucks or are curious about the financials. The link below shows you the latest and most relevant search results.

Looking at a company’s financials gives you an idea of its strength.

Search Results – Starbucks financials.

Starbucks Company Assessment

Looking at the outlook of Starbucks allows you to identify trends and whether the company is on an upward or downward trend.

An upward trend shows a strong management team, while a downward trend can be because of problems in the market or a problem with the company’s management team.

Search Results – Starbucks performance, trends, and assessment.


Books are one way to expand your knowledge of Starbucks. Books cover the company’s history and those in management.

The link below offers a list of books related to the coffee giant, provided by Google’s Book search.

View the most recent Google search results for books related to Starbucks.


There is always something in the news related to Starbucks. I like to use Google News because it’s accurate, and I can get the latest and most popular stories.

You could also come across some archived news stories.

Use the link below to spend a few minutes seeing what’s in the news related to Starbucks.

See Google’s news search results related to Starbucks.


You can view a few interesting videos on YouTube related to Starbucks.

I look forward to watching videos about how a company evolved and where it is today.

In addition to the information in this article, you can get a quick overview by watching videos related to Starbucks.

See the most recent videos related to Starbucks.