Starbucks Coffee – Company History

The first Starbucks coffee shop was opened in March 1971 in Seattle, Washington.  The founders were three partners, namely Jerry Baldwin (an English teacher), Zev Siegl (a history teacher) and Gordon Bowker who was a writer. The idea of a coffee shop came from a personal friend of theirs, Alfred Peet who ran a business selling high-quality Coffee Beans and equipment. In fact, owing to the partners close ties to Alfred Peet, the first year of trading saw them purchase all of their beans from his Seattle store. It was only well into their second year of trading that they began to source produce direct from growers.

The founders wanted to call the company Pequod, after the 19th century Nantucket whaleship from the 1851 novel Moby-Dick. This was rejected and as a result their first coffee shop was named after the ships first mate, Starbuck.

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In the beginning Starbucks only sold coffee beans and brewing equipment, with the view that coffee was a drink that consumers wanted to make at home. Even as late as 1982 when entrepreneur Howard Schultz joined the company (as Director of Marketing and Retail Operations) they still only sold beans and equipment. As his role of marketing director, Howard Schultz tried to persuade the three founders that there was plenty of money to be had selling pre-made coffee. Despite his enthusiasm the founders would not be pressed into expanding their business, citing that such a move would distract them from their core business. Such reluctance to diversify led Schultz to go it alone and start the Il Giornale coffee shop chain in 1986.

Schultz ended up buying Starbucks in 1987, thus regaining his original position at the company.

Contrary to what many believe, owing to their focus on selling only beans, Starbucks was not a part the pioneering Seattle coffeehouse scene which is generally believed to have started with the opening of the Last Exit on Brooklyn coffee shop in 1967.

Starbucks Expansion

The first Starbucks store was located at 2000 Western Avenue, Seattle. From 1975 it relocated to 1912 Pike Place, Seattle, a location where it remains to this very day.

Expansion was almost non-existent under the leadership of the original founders, with the only major move being the acquisition of Peet's coffee store, their original supplier and source of inspiration. This takeover was led by Peter Baldwin (who still works there).

Under the leadership of Schultz, Starbucks quickly expanded beyond its home city in 1987 with outlets at Waterfront Station, Vancouver and Chicago. By 1992 the number of Starbucks stores had grown to 165, all within the United States. This was the same year that the company floated on the stock market.

Starbucks currently operates in over 50 countries across the six continents of Africa, Asia, North America, South America, Oceania and Europe. Its headquarters is still in Seattle at the Starbucks Center which is a former Sears, Roebuck and Co. catalogue distribution building.

International expansion of Starbucks stores

The first coffeehouse outside North America opened in Tokyo in 1996, with an entry into the United Kingdom occurring just two years later. The UK entry was assisted by the company paying $83 million for the Seattle Coffee Company which had 60 stores at the time. Despite its name, this was a UK based company just playing on Seattle's history in the coffee shop world. All of its stores were promptly re-branded as Starbucks thereby giving the company a huge presence very quickly in this important market.

The first Latin American store appeared in 2002 in Mexico City whilst Lima, Peru was chosen for the first South America outlet in 2003. Expansion in the Americas continued in 2010 with the first Central American store in San Salvador, El Salvador.

Starbucks coffee has helped maintain their industry leading status in the US through the acquisition of key rivals. Seattle's Best Coffee was taken over in 2003 and although the brand identity was maintained the products are marketed as a lower cost offering, thus distancing itself from the upper-class image of its parent company. Torrefazione Italia was also acquired in 2003, although the majority of the branches were closed down.

Another major acquisition took place in 2006 with Diedrich Coffee coming into the fold. All locations were either closed down or converted into a Starbucks outlet.

Apart from the UK acquisition, expansion into Europe didn't really get underway until the late 2000's. The first Russian store was opened in 2007, with 2008 seeing the company move into many new territories including Argentina, Bulgaria, the Czech Republic and Portugal. The following year saw Starbucks enter Poland, Algeria, the Netherlands and Sweden. The first Hungarian store opened in Budapest in 2010.

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Making some Peets Coffee