The first Starbucks was opened in Seattle, Washington in 1971 by three partners who were

inspired to sell high quality beans and roasting equipment. However, it was only in the
1980s that they began selling coffee in the way we know it today. This shift is mainly due to
the changing population, with more people working and needing quick and convenient and
yet high-quality coffee. The coffee company pride themselves on selling coffee made from
ethically sourced and high-quality beans, with their Espresso Roast being FairTrade
accredited, while the remainder of their products fall under their C.A.F.E Practices (Coffee
and Farmer Equity). This ensures that there are economic, social, environmental and quality
requirements that all of their suppliers must uphold to.

Starbucks were one of the first firms to adopt mobile technology, creating an app in 2009 to
allow customers to check the balance of their loyalty card, and in a select few stores,
customers were able to pay using the app. This use of technology has only further
differentiated them in the market due to the Coronavirus outbreak, allowing customers to
order and pay for their drinks without having to come into contact with an employee and
adhering to social distancing measures. This mobile technology has also allowed them to
collect large amounts of data on their customers, allowing them to track the drinks that they
purchase and use that to recommend them products that they should purchase in the
future.

However, it is not all smooth sailing with the firm having recently come under scrutiny for
the amount of tax they are paying, having only paid £4m worth of tax despite earning
£387m in revenues. Further to this, in 2018 a US employee won an Employment Tribunal,
when suing the corporation for unpaid overtime. They came under even further scrutiny in
that same year when pressure groups called for them to deliver their pledge to develop a
recyclable coffee cup with a petition signed by nearly 900,000 people and protesters
gathered at the company’s Annual General Meeting.

More recently however, the pandemic has only quickened Starbucks’ restructuring plans of
moving away from traditional cafés and toward more drive throughs and online ordering.
But like many businesses they have seen a significant decline in trade due to the virus and
because of this many staff have seen a reduction in their hours. Although the governments
Eat Out to Help Out scheme has been extremely affective in helping them build back up to
their pre-lockdown level of sales. Starbucks have seen very similar patterns of trade in the
past, for example the Brexit vote in 2016 caused consumer confidence to plummet and saw
sales decline. This combined with slowing economic growth, correlated to a 61% reduction
in UK pre-tax profits.
Identify external factors that may affect Starbucks. Use this to figure out what the PESTLE
acronym stands for.

Extension:

To what extent is the global Coronavirus pandemic the most important external factor
affecting demand for Starbucks (16 marks)