It’s no secret that Starbucks dominates the coffee industry. Analysts have marveled for years at how a single, Seattle coffee shop, founded in 1971 grew into one of the most recognizable brands in the world. The coffee chain recently opened its 30,000th store and reported $26.5 billion in annual net revenue.
Who is Howard Schultz, the Starbucks Visionary?
Howard Schultz’s billionaire, rags to riches story is a prime example of the American dream. Schultz was born in Brooklyn, New York to a working class, immigrant family in 1953. He grew up in the projects and quickly learned how easy it was to lose everything when his father lost his job selling cloth diapers after he slipped on ice and broke his ankle.
Schultz became the first person in his family to graduate college and quickly took a job where he sold office equipment door-to-door. By chance, he discovered a small, coffee company in Washington state – Starbucks. Enchanted by the taste of espresso and sense of community he found in espresso shops on a work trip to Italy, Schultz pitched his idea of espresso shops to Starbucks. The founders were convinced enough to test his “coffeehouse” concept in downtown Seattle. In 1985, Schultz felt it was time to seek his own fortune in the coffee business and left Starbucks. He established Il Giornale, named after a Milanese newspaper, a place where people could sit for hours enjoying some relaxing music and a fresh espresso.
Within the next four years, Il Giornale grew into 12 espresso shops. Then in 1987, the original Starbucks management decided to focus on Peet’s Coffee & Tea and sold its Starbucks retail unit to Schultz, who had the help of some local investors (including Bill Gate’s father), for $3.8 million. Schultz decided to rename his Il Giornale coffee shops after the company that gave him his start. Now the CEO of Starbucks, Schultz rapidly expanded Starbucks from 11 locations to 30,000 locations worldwide. Starbucks is now valued at over $100 billion. Howard Schultz realized his father’s dream – with hard work and persistence, Schultz now enjoys the life of a billionaire – all from nothing!
Magic Johnson Once Owned 105 Starbucks… How Did He Do It?
From a young age, Magic Johnson knew he needed to work hard to succeed. Born and raised in Lansing, Michigan in 1959, Johnson grew up in abject poverty. His father worked long shifts at the local factory and his mother, a school janitor, spent hours cleaning for minimum wage. Johnson’s first love was basketball and the sport propelled him to Michigan State University on a full scholarship. Johnson won the 1979 NCAA Championship at Michigan State and then went on to win five NBA Championships with the Los Angeles Lakers. The NBA legend was inducted into in the NBA Hall of Fame in 2002.
On the heels of a legendary basketball career, Johnson began a second career as an entrepreneur. Magic used his wealth and connections to revitalize poor communities. He established the company Magic Johnson Theaters in 1994. The company built first-rate multiplexes in urban communities, bringing high quality facilities and technology, as well as job development, all in the name of economic growth.
Johnson next noticed a lack of Starbucks in urban locations. Up until 1998, Starbucks exclusively targeted wealthy areas to sell its coffee. Johnson convinced Schultz that ethnic, urban areas would be a great market to capture. The Lakers legend explained to Schultz, “Latinos and black folks… we like coffee too.” Schultz decided to take a chance on the basketball great and the two forged a 50-50 partnership to develop a chain of urban Starbucks locations. The urban locations altered the menu and music selection to reflect customer tastes in the area. When Johnson resold his locations to Starbucks in 2010, the Johnson/Schultz partnership had resulted in 105 urban locations! Johnson leveraged his incredible popularity and competitive spirit into a multi-million dollar enterprise, a true American dream!
People Stand on the lines at Starbucks, they see the dream and they want to know – “How Can I Own A Starbucks?”
So people see the incredible growth of Starbucks and the numerous licensing opportunities and wonder – how can they buy their own? Several influential celebrities and entrepreneurs are able to secure licensing deals with Starbucks. Some entrepreneurs without the proper industry experience or connections look to franchising as a viable alternative. The problem is, Starbucks does not offer franchise opportunities
Some people who choose to go the franchise route instead can still find some attractive Starbucks alternatives. When someone looks to buy a franchise, they buy the license to operate a business under the name and likeness of an established brand. People use the franchise business model to partner with well-known companies and gain valuable advice from business professionals with years in the industry. The five trending coffee companies that offer franchises are listed and described below!
What other coffee shops are people interested in?
Dunn Brothers Coffee
The Dunn Brothers got their start in Portland, Oregon nearly 30 years ago. They have spent over 30 years perfecting their craft. Dunn Brothers Coffee operates more than 60 stores and plans to expand rapidly in 2020.
- Approx. Initial Fee: $69,000 (per 2019 FDD)
- Approx. Startup Cost: $944,000-$1,592,250 (per 2019 FDD)
- Approx. Revenue Range: $1,066,524-$2,211,967 (per 2019 FDD)
PJ’s Coffee of New Orleans
PJ’s Coffee of New Orleans offers gourmet coffees, teas, and other menu options. The New Orleans coffee chain was founded by Phyllis Jordan (PJ) in 1978. PJ’s began franchising in 1989 and has not look back since. PJ’s Coffee of New Orleans offers over 65 locations and seeks to launch more coffee shops across the nation. Entrepreneurs can invest in either a café, kiosk, or truck.
- Approx. Initial Fee: $35,000 (per 2019 FDD)
- Approx. Startup Cost: $198,275 – $578,000 (per 2019 FDD)
- Approx. Revenue Range: $528,310 – $1,370,341 (per 2019 FDD)
The Human Bean Drive Thru
The Human Bean got its start in Oregon in 1998 and now operates 94 locations around the U.S. The Human Bean specializes in the preparation and sale of espresso coffee. The Human Bean will also appeal to environmentally conscious entrepreneurs looking to make a global impact. The Human Bean has their own coffee sourcing program called Farm Friendly Direct. This program works directly with farmers around the world to form long-term relationships and support the farming community. This ensures a good supply of coffee beans from the farmers and helps the farming community have a better life.
- Approx. Initial Fee: $30,000 (per 2020 FDD)
- Approx. Startup Cost: $211,625 – $738,375 (per 2020 FDD)
- Approx. Revenue Range: $533,899 – $557,550 (per 2020 FDD)
Gloria Jean’s Coffees
Gloria Jean’s Coffees is also one of the largest coffee franchises on our list. With over 900 stores in operation, the Australian-based Gloria Jean’s plans on opening 58 more before the end of 2019. The coffee company prides itself on hands-on executive team that works closely with franchisees to pick designs, share product innovation, and creative consumer marketing.
- Approx. Initial Fee: $25,000 (per 2019 FDD)
- Approx. Startup Cost With Drive Thru: $381,450 – $473,000 (per 2019 FDD)
- Approx. Startup Cost Without Drive Thru: $294,450 – $381,500 (per 2019 FDD)
- Approx. Revenue Range: See FDD
The Coffee Beanery
Similar to Starbucks, The Coffee Beanery has been around for decades. Founded in Dearborn, Michigan in 1976, the company began to franchise in 1985. The Coffee Beanery operates over 200 locations across the country.
- Approx. Initial Fee: $15,000 (per 2020 FDD)
- Approx. Startup Cost: $260,000-$476,100 (per 2020 FDD)
- Approx. Revenue Range: See FDD
Coffee Shops Are Here to Stay and Continue to Sprout Up On Every Corner
Although Starbucks may be an attractive option for many entrepreneurs, the fact is – only a few will ever have the opportunity to open their own. Many people continue to seek franchise opportunities as a viable alternative. These great alternatives, domestic and abroad, mean that investors can still crack into the incredibly hot coffee market… and we’re not just talking temperature!
By Tyler Dikun and Jim Notaris