i'm a starbucks barista in a ritsy area, and customers will straight up keep hundreds of dollars loaded on their starbucks app. i'm shocked every time, like, it's a power move.
I live in UK. Starbucks was trendy here for a few years and then people realised they were paying top money for shit coffee. The only people who go to Starbucks these days are those who don't know better.
There is no Starbucks within 70 miles of where I live. However, if I'd go to the closest one, I could choose among 8 Starbucks within walking distance.
Countries which are welcoming Star Bucks stores don't even know how they are running unregulated Banks in countries like India and gradually taking control 😵💫😵💫😵💫
Hmm they made a 10 minute video from this, classic RU-vid. I don't know if it was only in my country or not, but there was a bank which gave home loans, so to apply for a home loan, you had to pay some money, now their model was to earn money from these applications, and loan that money.
This video was like a magic trick. At first I was like “how can they be a bank that makes no sense.” Then I had kinda forgotten about the bank premise once we were deep into the history of Starbucks, and by the time he mentioned the Starbucks card I was thinking of this as more of a Company Man video. Like “oh cool so that concept helped save the company.” Then BOOM he hits us with the Largest Banks graph from earlier in the video and I was like “WOAH THEY’RE A FUCKING BANK HOLY SHIT”
@UCRKY1Fq_ic9Vphqi43jMDLg A variety of opinions is healthy unless one loves oppression and is vehement regarding their predilect of totlitarianism and autocracy.
"McDonald's is a real estate company" "Starbucks is a bank" next video: "Pepsi sells smartphones" edit: why is everyone copying my comment this was my idea....
I am not really a Starbucks customer. I wish you would’ve gone deeper explaining what benefits they give to their customers for using the card to pay. If you wanted to continue the bank analogy, this is essentially the interest their paying to borrow the money from their customers.
@@user-so3nj7rj1d Of course it is. Do you really think everyone in the world knows what Starbucks is all about? I didn't know about this card system they have for example since I'm not a customer. Without that vital piece of information and understanding the impact it had in their business practice I wouldn't have understood anything.
This Starbucks story is more of courage than genius. I am still thinking about the courage to ask people to pay for things they don't want now and convince them that they will need it tomorrow. The magic of brand loyalty and compound interest are on the same level
@@nahor88 I've seen mine spelled so many interesting ways, I've started looking forward to it as a special surprise 😉. Collumn, Caleb, Calvin, Colin, Colon, Kallem, etc but rarely Calum. Every order is an adventure!
I used to always keep at least $100 in my Starbucks "bank". Since the pandemic I never go to Starbucks anymore because I can no longer sit down at a table. I may be wrong but I'd guess that I am not the only Starbucks customer in the world who has stopped "banking"
Surely for all of Europe? On an average day wandering around Stockholm, I don’t go past any Starbucks and I never see a Starbucks cup in anyone’s hand.
Where I live, starbucks is regarded just like apple: a place where people drink coffee as a status symbol more than to have a nice cup of coffee. People here consider them both to be overpriced, too.
where i live starbucks is not seen as classy it's like mcdonalds here but where i live there are like a million indie coffee places so it's one of those bubbles
@@AliAhmed63708 Well, them and everyone else who makes phones. Apple has a well-earned reputation for being overpriced, and its products certainly are viewed as status symbols.
I once went to Starbucks with my youngest daughter. She is 25. I ordered a medium black coffee. It wasnt a problem to get that, they didnt question it, but they looked at me like I had three heads. When I said my name is Mrs Hildreth they looked at me like I had six heads lol.
Haha i had the same experience. I ordered coffee and the barista stared to list all sorts of "coffee" they sell. I again said "coffee black". He looked at me as if i was an alien.
@@eugenekrabs2289 Someone who wants a coffee? There are 100 reasons why you couldn't have made the coffee at home? Maybe you already late? You didn't even intended to drink a coffee but maybe you have to wait and said to yourself, well lets get a coffee then... What a stupid reasoning is that?
@@daviddarcy1413 I heard about that, something about an established small business coffee culture, very neat It does ok here but is definitely out performed by Tim Hortons in regards to coffee, Starbucks is more where you go to get fancy sweet drinks which are absurdly overpriced
I've had $86 on my mobile Starbucks card for the past 6 months. Just as good as cash especially in a crunch. People would keep $100s on there SB card. When it first launched the rewards program was incredible. Not so much anymore.
You missed two things: 1. Starbucks's first international expansion was to Canada. Yeah Canada is its own country, its not just USA-North. 2. One of the big things that makes a bank is that they can loan more money out than they have on deposit. Thats right, if a bank has a hypothetical $100 on deposit, they can loan out $1,000 or so. So yeah Starbucks has a significant amount of deposits, but the only way they can make money on that is by investing it somewhere or loaning it to someone else.
Surface=level, you are right, but you miss one thing: The money Starbuck has "on deposit" is not going to be paid out in cash, but rather in food and drinks. Since we know that Starbucks is making an obscene amount of profit compared to what it costs to brew a cup of coffee, they are returning 1000 dollars in "value", while using only 10 pct or so in the raw materials needed to create that 'value'. Put another way, whereas a bank needs to take in a deposit first before they can loan on it and make a profit, Starbucks already made the profit as soon as a customer put money on a card or app.
@@shelbynamels973 Eh, your understanding of Starbucks's profit margin isn't correct. They're making something like 20% profits. (Raw materials is not all of the costs of serving your coffee, there is labor, facilities, transportation, and more.) But in any case you're not saying that they're a bank either. Lots of companies take money and exchange it for a product, Starbucks is just taking the money earlier than others, but they still have to provide the product. (Assuming that the card gets redeemed, and I'd gander a significant percentage of money on Starbucks cards get redeemed.)
@@NickCBax I'm re-posting again, it looks like me initial response hasn't been picked up. To paraphrase, our disagreement about Starbucks' profit is about the size, not the fact that there is one. Our quibble is about the inputs, and by how much they affect the company's bottom line. Many companies issue gift cards, but I imagine very few sit on a pile worth 1.5 billion that costs them 0 pct in interest. Also, a lot of gift cards - the dirty little secret in the industry - never get redeemed. That is the 'breakage' the video referred to. A quick online search put that figure at around 20 pct of all gift cards. That is money Starbucks gets to keep without ever providing any kind of value for in cash, food or drink.
@@shelbynamels973 I'd really like to know a bit more about the numbers. That $1.5B is a snapshot on a specific date. It is possible, and likely that a significant chunk of that will be spent in the month after that snapshot. (Starbucks has revenue of about $24.5b, so figure they do about 2 billion of revenue per month.) What would be more interesting to know is how the amount the unredeemed gift cards have changed over the years and quarters. I'm also curious if the restructure of their rewards program (allowing people to earn rewards without using a Starbucks card) has reduced the amount of unredeemed gift cards they have on their balance sheet. Also, that money isn't completely free. There is a fair bit of infrastructure around gift cards that Starbucks has to stand up. Including making the cards themselves. So while its a 0% loan, they do have costs from that, which I'm sure are covered by the breakage. A bank almost always engages in fractional banking. They take a deposit of $100, and then they can lend $1,000. That is one of the core fundamentals of being a bank. A bank could not make money if they took a deposit of $100 and could only lend $100 out. The key difference between a bank and Starbucks is that Starbucks cannot engage in fractional banking. There isn't a way for them to do so and it would be illegal if they tried to do so.
@@NickCBax I really have to wonder, are you such a stickler for excruciating detail and minutiae in all aspects of your life? Of course the 1.5 bil figure is a snapshot in time. It goes up, and it goes down. What matters is the trend line. If more and more people can be convinced that storing money on a card or a phone app is a good idea, than that amount will continue to trend up, as it did all the years before it reached 1.5 bil. To say the money is not completely free is more of a sign of getting lost in granular detail. Banks issuing credit cards have expenses associated with printing the physical cards and the cost of mailing them, but that cost is rolled into the business. I have yet to find a bank that will charge my account for the cost of printing and mailing a card. Also, banks mail out monthly statements, Starbucks doesn't, so more money saved. Whether Starbucks engages in fractional banking was never the point of discussion. In my post I tried to show that Starbucks does not have to wait to make a profit on the money it has 'on deposit' the way a bank does. Starbucks makes a profit on the money as soon as it is deposited, since it doesn't have to provide the product the money is supposed to pay for until much later, and in case of unredeemed cards, that time is never. So no need to keep nitpicking. Starbucks has been very successful since its inception. They will continuously try out new things, in menu items as well as operation. If an item or a way of doing things turns out to be profitable, they will continue with it. If it doesn't make them any money, they will quit doing it. Captive money storage seems to be working for them, I expect they will stick with it into the future.
i used to work in a starbucks in the UK and people here as a rule hate the starbucks loyalty card. the norm for other chain coffee shops is that the loyalty card is something you scan/swipe but you pay with cash/card. once you tell people you have to load money onto the card at starbucks to get the loyalty points, people become very skeptical and give up on the idea. it was only the truly die-hard starbucks regulars who used the app with any regularity. i feel like starbucks doesn't have enough of a market monopoly here (i believe costa is the most popular chain coffee store) for people to feel like loading up a card makes sense.
This ‘Starbucks card’ makes me realise how laundromats can make so good money - when I moved from my student housing, I still had unused money on the laundry company account. Guess lots of other people did the same as well.
You say there's no Starbucks franchise. But when I went to Milan in 2019, my friend who worked at the big non-franchise Starbucks told me that there were some small Starbucks franchises in the city. I even went to 2 to buy mugs and tumblers which were exclusive to those small franchise and a lot more expensive than what could be bought in the non-franchise Starbucks.
The best thing about Starbucks is their wifi. Sadly, a lot of the stores in CA are now removing outlets so you can’t work for long. I travel and have relied on Starbucks to be able to work for an hour at a time. I always order food and coffee as well as tip the baristas very well. I’ve already started to look for alternative places to work. Panera’s being one
It's really silly to call a company with negative equity a bank. For example, their ~$1B in uncashed gift cards is dwarfed by their $7B in lease liabilities.
Yep. Indie Italian coffee shops and places like Cibo win hands down in Australia - because the coffee is 100% better. Starbucks failed to understand this and pulled out
"The first international, in Japan, during 1996." Guessing that when Starbucks open in Vancouver on March 1, 1987, Vancouver, British Columbia and/or Canada was part of the United States.
Totally. It is a bank as much as a fast food and drink place. When I was living in the US, my Gold card was right next to my debit card in my wallet. I had my real money, and then I had my “Starbucks money” - which of course could only be spent at Starbucks. My reward for doing this was that I could get free Starbucks merch, which I could in theory resell, thanks to eBay (and to Starbucks for always varying their cup designs). I even made “interest” on my “Starbucks savings”, by buying my Starbucks gift cards at a store that gave cash rewards, and then transferring the gift card value to my Gold card. It was a core part of the economic engine of my life. And when and if I go home I’ll probably go right back to it! (Sometimes I wonder if my baristas miss me because I went to the same ones every day!)
I think you missed saying a very important part: you cant just pay for your starbucks drink, you have to add a certain amount of money first, and then pay for your drink from the money in your account. That's how it's different than other online food & drink ordering
As a barista at Starbucks, I just don’t understand how it’s so popular. A mom and pop shop has way better coffee (I love the natural taste of espresso, without all the added sugar), and a family shop has a way better atmosphere. It honestly hurts me what Starbucks has done to American coffee
"Starbucks is known everywhere as THE coffee shop" (at 0:40). Not in Australia it isn't. Certainly here in Melbourne, the few Starbucks that did appear soon got a reputation for: - Being stark and uninviting. - Being inflexible. - Not offering much choice. - Being expensive. - Making lousy coffee. They quickly disappeared. I haven't seen one since.
4:00 Japan didn’t have the first international Starbucks. The first international Starbucks came a decade prior to Japan’s. It opened in 1987 in Vancouver Canada at waterfront station.
The moment when you realised Americans thought Canada was just another one of its state which speaks with a slightly different accent and really good at dealing with cold
thats a huge stretch, it may work in the us but would never work here in sweden for an example where people are a lot more frugal. In fact starbucks tried to open up here but they failed against the local competition and had to leave.
The Starbucks "rewards" system is REALLY shifty. I started using it last year but noticed right away that the rewards are very meager per dollar spent, that they try to coax you into buying sets of products for a minor bonus, and as you explained in the video that they convince customers to invest millions of dollars with, again, only meager rewards. It makes me not want to visit them anymore.
This vid has solved two of the mysteries in my life: 1. Why starbucks staffs always annoy me with putting money into their loyalty card. 2. Why some ppl are so loyal to starbucks almost making it look like a cult.
Yeah, I'm so fucking confused about it. Somehow the x-axis is labeled as "# banks"? So it's like, there are few banks (including PayPal) with >$10B, more banks (including Starbucks) with
Starbucks isn't a bank. A bank has to give you your deposits back, and it's for that reason, they need to carry insurance, and comply with reserve requirements. Starbucks just has to let you redeem whatever your balance is against whatever they're selling at the time you use your card. If every depositor into a bank came on the same day to withdraw their funds, the bank would be insolvent. If ever Starbucks customer came in on the same day to buy coffee, Starbucks would post an unprecedented quarter of sales growth. But that would never happen, because most people who charge up their Starbucks cards have no incentive to drink 24 Venti lattes in a single day.
Great video. However, one correction. At 8:00, the more accurate comparison would be money in Starbucks app compared to large bank liabilities, not assets. Money people keep in the app is like deposits at a bank, which are the banks liabilities, not assets. (Bank assets are loans receivable)
Accounting guidelines say otherwise. That money would be booked as unearned revenue on their balance sheet which sits in a separate account so Starbucks would not be able to invest/borrow against it
@@mpcrazyscience7097 it goes down as unearned revenue because Starbucks hasn’t provided any good/service in exchange. It’s a liability until the gift card actually gets used. You can also think about it from an anti-money laundering standpoint. If they call it earned revenue the minute the gift card is sold then companies who are trying to launder money could just say that they’ve been selling gift cards to account for all the illegal cash. That’s why they have to wait until the gift card is used to consider it earned
Very good move, Starbucks. Building customer confidence is the key to success. In some ways, similar to loyalty points from Airlines (you know, when we used to go places) that you routinely let expire because the gift catalog is crap.
