How is Starbucks so Successful?

First opened in 1971, Starbucks has become a household name and the favored place to study and work for millions of students and employees worldwide. Getting a coffee from Starbucks before school or work has become a fixed part of many people’s daily routines.

Modern coffee has existed since the 15th century, so how did Starbucks turn such a simple beverage into a multi-billion dollar corporation?

A ‘Third Place’

As former CEO Howard Schultz has stated numerous times, Starbucks’ “Third Place” policy is one of the most integral components of the company’s identity.

In an open letter titled "An Open Letter to Starbucks Partners from Howard Schultz," Schultz wrote: "The third place is a welcoming, safe and inclusive environment between home and work where everyone is welcome and we can gather as a community.”

The concept of a “third place,” created by American sociologist Ray Oldenburg in 1989, details a place besides home and work where people can connect with their community and feel most comfortable.

Starbucks has prioritized making its shops aesthetically pleasing and comfortable, with a premium color palette, comfortable furniture, and free Wi-Fi. This setting has been repeated in all of its stores, creating a standardized yet pleasing environment for people to spend time in.

By establishing a “third place” for students and workers, Starbucks has generated significantly more revenue, as both groups benefit. People are allowed to work for however long they want in the shops, with free Wi-Fi and a comfortable environment. Starbucks also benefits, as it sees an increase in customers when the same students and workers purchase items during their visit.

Creating a Coffee Culture

Starbucks' next incredibly successful strategy is to create and capitalize on a culture where coffee is an essential, everyday consumable. You probably know someone who “has to have coffee” in the morning. They may be joking, but caffeine addiction is real and may be a large factor in helping Starbucks generate consistent revenue.

Caffeine affects the brain by releasing dopamine, which makes us feel good. It’s found in many popular foods like energy bars, sodas, and, of course, coffee. This is because we feel happier and more energized when a reasonable amount is consumed. However, there are drawbacks, and caffeine should only be consumed within the FDA-approved limit of 400 milligrams a day (for healthy adults).

Still, due to coffee's caffeine content, millions of people around the world consume it daily to get ready for work or during a break. Though Starbucks did not create this culture of drinking coffee regularly, the company is focused on it, as it often develops advertisements targeting sipping coffee to energize for the day and as a beverage during breaks.

Starbucks coffees also have a high amount of caffeine, with just two “short” coffees being right below the approved amount. Though it’s nothing to worry about, regularly drinking above the agreed amount can undoubtedly lead to caffeine dependency. Although this isn’t as severe as other addictions, it certainly creates a group of regular customers Starbucks can always depend on (i.e., people who “have to” drink coffee in the morning).

Final Thoughts

Starbucks is a massive food company that has been dominating the coffee shop market for years. With the establishment of Starbucks shops as a favored ‘third place’ and the spread of “coffee culture” among its millions of loyal customers, Starbucks earns billions of dollars in revenue annually. I believe these successful strategies, accompanied by many other underlying factors, have established Starbucks’ monopoly in the market. 

If you’ve read this post thoroughly, the next time you sip on some Starbucks coffee before work or pass one of its many chains, you’ll understand the depth of the giant’s strategies and exactly why Starbucks is so successful. You might even apply this knowledge to your own business. 

As Michael Jackson once said, “Study the greats and become greater.”

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