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The Impact of the COVID-19 Pandemic on Starbucks Company


Starbucks is an American company that owns the eponymous coffee chain operated by the Starbucks Corporation. The headquarters is located in Washington DC. The total number of employees reaches almost two hundred thousand people. The Starbucks structure includes more than 24,000 retail outlets and coffee shops in 75 countries of the world in the Americas, Oceania, Europe, and Asia (Starbucks – About us, n.d.). The assortment of coffee houses is represented by low-calorie and sugar-free drinks, puff and yeast pastries, quality coffee, milkshakes, snacks, and serving accessories. Ordinary shares of Starbucks on the stock market are available for purchase on the American Exchange – NASDAQ. The company pays dividends every quarter. Over the past several years, Starbucks has maintained a stable dividend rate throughout the year: on average, the company pays out $ 0.36 per common share (Macrotrends – Starbucks Financial Statements 2005-2021 | SBUX, 2021). However, the pandemic also impacted successful companies, which weathered the consequences more easily against the backdrop of small and medium-sized businesses. This paper investigates the impact of the pandemic on Starbucks as a whole, its financial performance, and its interpretation. This study will be of the type of exploratory studies with elements of descriptive studies, as it seeks new insights into the indicated problem and tries to explain the relationship between the variables of financial indicators and the reasons.

The Pandemic’s Impact

Research Objectives and Methodology

This study aims to quantify the impact of the pandemic on the operations of Starbucks, which has been successful in the market for a long time. The relevance of this topic is explained by the uniqueness of this situation, in connection with which the study of the reflection of economic indicators will be significant for understanding the development strategies of companies and reactionary activities. The study of processes on the example of an organization operating in the market for a long time is more accessible since much information about the company is in the public domain. The various social, political, and economic factors affecting Starbucks are more global, making the pandemic’s global scale commensurate with the company’s size. The application of the results of this study will be helpful to both other large companies and for organizations of medium and small businesses, which will be able to navigate the main problems and dependencies between global qualitative changes and quantitative financial indicators.

The choice of research questions is an essential part of the design stage. First, the results of the research depend on the right questions. Secondly, a clear strategy for planning a study can affect the timing of its implementation, opportunities. In this regard, for this study, questions were posed that consider all the necessary nuances: the availability of information for research, a relevant topic, and the lack of direct answers to questions in the existing scientific literature (Saunders, Lewis, and Thornhill, 2019). Therefore, for this work, the following questions were posed: what company’s performance was before the pandemic in qualitative and quantitative terms; what is the position of the company now; what external and internal factors affect the quality of the company; and how this impact is reflected in the quantitative indicators of financial performance.

The methodology of this work is to combine several methods. This approach has several advantages over the mono method in that it allows a more detailed assessment of questions from different points of view (Saunders, Lewis, and Thornhill, 2019). Qualitative methods are better suited to the exploratory stage of this study: set the initial conditions, discuss the dynamics of influence, which so far has no quantitative equivalents. The dependence will be established at the explanation stage, where numerical correlations, in other words, quantitative methods, will have a greater weight. Finally, another advantage of this approach is highlighted – triangulation, which allows studying the issue from three sides to confirm the results independently, but in this work, there are only two methods, which is why the potential is not used to the maximum. The weaknesses of this approach, as a rule, are the time and the threat to the reliability of the information. The data available in open sources do not always reflect an accurate picture. In addition, the search, selection, analysis, and interpretation can take quite a long time when choosing from a large amount of information.

This study does not violate any ethical standards, as it is for informational purposes only, and only information from open and reliable sources is used for conclusions. As a result, the conclusions drawn can be used both by further researchers on the same or related issues and by the most monitored company for cooperation. Any value judgments in this work are accompanied by evidence and references and are purely scientific.

Company Before Pandemic

Starbucks is generally considered one of the most well-known coffee and coffee brands globally, with a reputation for quality and value. In this regard, the company demonstrated constant economic growth due to geographical expansion and slight diversification of its products: access to retail sales of branded coffee and many more (Tjokrosaputro and Cokki, 2020). At the same time, the company is not lagging in the technical part, collaborating with giants in the smartphone market – Apple, developing remarkable offers for users of mobile applications (Tjokrosaputro and Cokki, 2020). At the same time, the primary audience for Starbucks is the generation of baby boomers, who, due to their wealth, could afford a good, high-quality, and expensive product (Lee, Jung, and Moon, 2021). Due to these factors, the company has been a leader in the market for more than fifty years, reflected in its financial performance.

Starbucks has extremely positive financials through 2020. The company’s revenue grew annually until 2020, while there was also an increase in gross profit while maintaining the same level of cost of goods sold (Macrotrends – Starbucks Financial Statements 2005-2021 | SBUX, 2021). This fact signals that the company is very competent in dealing with production resources, constantly finding an opportunity to save money without harming its quality and revenue growth. Nevertheless, the company’s operating expenses are growing in proportion to its revenues, which can be said about operating income and net income. As one of the indicators of the company’s profitability, EBITDA also shows annual growth until 2020, which reflects the positive dynamics of purely financial activity, excluding long-term debt and capital funds (Macrotrends – Starbucks Financial Statements 2005-2021 | SBUX, 2021). However, for a more detailed assessment, it is needed to refer to other company financial indicators.

The company’s assets peaked in 2018, as did net income and revenue. However, the increase is mainly due to a change in the long-term debt indicator, which has more than tripled (Macrotrends – Starbucks Financial Statements 2005-2021 | SBUX, 2021). After 2018, the company’s current ratio became negative, which affects its liquidity and ability to pay off short-term liabilities. The company corrected the situation in 2020; however, there is no confident forecast for the future in this case for several reasons. Firstly, Starbucks has already quite widely realized its potential, and therefore, especially significant investments, projects, or financial injections are not expected. Second, the significantly increased long-term debt in 2018 disrupted its relationship with the available capital quite noticeably, increasing it by several whole units.

Company During Pandemic

In 2020, the company’s financial performance declined significantly. First, revenue, revenue, cash turnover, and, as a result, gross and net profit fell (Macrotrends – Starbucks Financial Statements 2005-2021 | SBUX, 2021). Second, the increased long-term debt in 2018 had an impact on assets-liabilities ratios and related metrics. For example, return on assets has dropped significantly, which has maintained its level for more than ten years, which indicates a drop in profitability relative to its assets. Nevertheless, such a problematic situation has been taken under the control of the company’s management and is gradually improving, as evidenced by the return on equity indicator, which also considers debt. If in 2019, it fell by more than two hundred percent, excluding the statistical outlier in the form of 2018, with an abnormally high rate due to free current assets (Macrotrends – Starbucks Financial Statements 2005-2021 | SBUX, 2021). It is worth noting that the company’s management itself is one of the largest shareholders of Starbucks, with about five percent of the company’s shares (Sinha et al., 2021). It can be summarized that the impact of the pandemic has significantly and quickly affected the company’s financial performance, but now it is necessary to analyze the qualitative determinants of such an impact.

Coffee is an integral part of the daily life of many people: it is a source of energy with a specific taste and aroma. After introducing restrictive measures of the pandemic, many people were forced to work remotely or even lost their jobs. As a result, the mass of energy was not wasted, purchasing power decreased, and the need for coffee (Sinha et al., 2021). This fact reflects the declining sales of Starbucks. Moreover, the uniqueness of Starbucks coffee consumption was mainly due to visits to the coffee shops themselves, stylistically decorated, with individual serving, communication with the barista, and the opportunity to be in a cozy room where coffee is made in plain sight. Restrictive measures and self-isolation have reduced clients’ likelihood of such experiences (Kee et al., 2021). The economic recession also means that if coffee drinkers continue to drink their favorite drink, they switch to cheaper products or reduce the frequency of consumption (Shim et al., 2021). The authorities impose restrictive measures on exports and imports, increasing the cost of logistics services globally, which cannot affect the company.

Starbucks also has a social commitment to protect the environment and support its employees. These facts confirm the company’s good reputation for social and environmental responsibility (Starbucks – About us, n.d.). However, such activities always require additional costs. Moreover, the company regularly pays dividends to shareholders, which, as a result of the policy of maintaining their performance, also leads to the need to increase debt to preserve its reputation. Finally, the company has not developed its own delivery service and logistics to the end-user, and therefore competitors with such experience and funds are easier to adapt to new crisis conditions.

However, it is worth noting the positive aspects of Starbucks, with which the company approached the pandemic. First, it is a well-designed and time-tested loyalty program that pays off in the form of repeat customers (Lombardi, Chidiac, and Record, 2021). Secondly, the company values ​​its reputation and, accordingly, the quality of the product, which is maintained regardless of crises. In this case, Starbucks should consider two options for its development after adjusting its financial performance. The first vector of development is its delivery, which can work during lockdowns and the effect of restrictive measures on visitors to coffee houses. This option is well suited for regular customers and wealthy people who, despite the economic recession, are still willing to pay for quality. The second option is to expand the range of coffee drinks or conduct additional promotions that allow tasting Starbucks branded coffee at a lower price to increase efficiency through customer acquisition cost, while the customer lifetime value is already high for the company.


As a result, Starbucks has many different options for solving problems over time, both quantitative and qualitative. Financial indicators strongly reflect the qualitative changes in the company caused by both external factors and internal structure. With the uniqueness of the pandemic situation, the inability to predict the timing of restrictions and all possible outcomes, and the structure of the post-pandemic world, the company can only adapt to new conditions. Tradition and leadership in the market, focus on quality and reputation makes it easier to adapt, but the lack of preparedness for restrictions and lockdowns, its delivery service, Starbucks loses potential profit. Nevertheless, opportunities for the company are still available: the changes will require additional costs that strongly affect the affected financial performance, but such vital decisions can bring essential and stable income in the future. Considering the increased total liabilities of the company, the management needs to consider just such methods of solution, primarily since the management itself is investing in the company.

This approach of combined quantitative and qualitative methods in this case study has proven itself well for such studies. First, correlations between financial performance and qualitative changes in the company, caused partly by external factors, are identified with greater accuracy. The interpretation of financial indicators takes on an individual and specific character, thanks to which we can talk about a detailed assessment of the company, which will be helpful to both further researchers and, for example, investors. Secondly, the dynamics of qualitative changes receive their scale in the form of all the same financial indicators. The degree of influence of a particular situation, external factor, or approach in management is a determinant, for example, of net profit, which in dynamics can be compared with previous years, when the manifestation of this determinant was minor or more. Ultimately, each indicator has many of these determinants, but sharp kinks in the graphs signal strongly influencing factors of the company’s external or internal activities, which should be responded to in the event of a fall or should be studied and used in the event of growth.

Reference List

Kee, D. M. H., et al. (2021) “Navigating through the COVID-19 crisis: A Case study of Starbucks”, International Journal of Accounting & Finance in Asia Pasific (IJAFAP), 4(1), pp. 24-36. Web.

Lee, W. S., Jung, J., & Moon, J. (2021) “Exploring the antecedents and consequences of the coffee quality of Starbucks: a case study”, British Food Journal.

Lombardi, C. V., Chidiac, N. T., & Record, B. C. (2021) “Starbucks coffee corporation’s marketing response to the COVID-19 pandemic”, Obtenido de Innovative Marketing, 17(2), pp. 177-188.

Macrotrends – Starbucks Financial Statements 2005-2021 | SBUX. (2021).

Saunders, M., Lewis, P., & Thornhill, A. (2019). Research methods for business students. 8th edn. Harlow, England: Pearson education.

Shim, J., et al. (2021) “Antecedents of purchase intention at Starbucks in the context of covid-19 pandemic”, Sustainability, 13(4), pp. 1-17.

Sinha, R., et al. (2021) “Impact of Covid-19 on Business Performance: A Case Study of Starbucks”, International Journal of Tourism and Hospitality in Asia Pasific (IJTHAP), 4(2), pp. 13-27. Web.

Starbucks – About us. (n.d.)

Tjokrosaputro, M., & Cokki, C. (2020) “The Role of Social Influence Towards Purchase Intention with Value Perception as Mediator: A Study on Starbucks Coffee as an Environmentally Friendly Product” In Symposium conducted at the meeting of the 8th International Conference of Entrepreneurship and Business Management Untar (ICEBM 2019). Dordrecht, Netherlands: Atlantis Press. Web.

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