Starbucks 2004 Annual Report Download - page 3

14 Fiscal 2004 Annual Report
line of coffee beverages, a limited selection of whole bean
coffees and a few accessories such as travel tumblers and logo
mugs. In the United States and in International markets,
approximately 2,100 stores and 500 stores, respectively, carry a
selection of grab-and-go sandwiches and salads. During fi scal
2004, the Company’s retail sales mix by product type was
77% beverages, 14% food items, 5% whole bean coffees and
4% coffee-making equipment and other merchandise.
In fi scal 2004, the Company introduced the Starbucks Hear
Music™ Coffeehouse, a fi rst-of-its-kind music store in Santa
Monica, California. This Company-operated retail location
combines the Starbucks coffeehouse experience with an
innovative new retail environment for customers to discover,
acquire and enjoy music. The Hear Music Coffeehouse gives
customers a hands-on guide to music discovery with its
interactive listening bar, and allows customers access to CD
burning technology to create personalized CDs from a digital
library of music. Currently, Starbucks is testing the CD burning
technology through its Hear Music™ media bars in select
Starbucks Company-operated retail stores.
Specialty Operations
The Company’s Specialty Operations strive to develop the
Starbucks brand outside the Company-operated retail store
environment through a number of channels. Starbucks strategy
is to reach customers where they work, travel, shop and dine
by establishing relationships with prominent third parties
that share the Company’s values and commitment to quality.
These relationships take various forms, including licensing
arrangements, foodservice accounts and other initiatives related
to the Company’s core businesses. In certain situations,
Starbucks has an equity ownership interest in licensee operations.
During fi scal 2004, specialty revenues (which include royalties
and fees from licensees, as well as product sales derived from
Specialty Operations) accounted for 16% of total net revenues.
Licensing
Although the Company does not generally relinquish operational
control of its retail stores in the United States, in situations in
which a master concessionaire or another company controls
or can provide improved access to desirable retail space, the
Company licenses its operations. As part of these arrangements,
Starbucks receives license fees and royalties and sells coffee and
related products for resale in licensed locations. Employees
working in licensed retail locations must follow Starbucks
detailed store operating procedures and attend training classes
similar to those given to Company-operated store managers
and employees.
During fi scal 2004, Starbucks opened 417 licensed retail stores
in the United States. As of October 3, 2004, the Company had
1,839 licensed stores in the United States. Product sales to and
royalty and license fees from these stores accounted for 24% of
specialty revenues in fi scal 2004.
The Company’s International licensed retail stores are operated
through a number of licensing arrangements, primarily with
prominent retailers. During fi scal 2004, Starbucks expanded
its international presence by opening 293 new International
licensed stores, including the fi rst stores in France and Cyprus.
At fi scal year end 2004, the Company’s International operating
segment had a total of 1,515 licensed retail stores categorized by
region and located as follows:
Asia Pacifi c Europe/Middle East/Africa Americas
Japan 534 Germany 35 Canada 66
China 152 Saudi Arabia 32 Hawaii 45
Taiwan 136 United Arab Emirates 31 Mexico 32
South Korea 102 Spain 27 Chile 9
Philippines 70 Kuwait 27 Puerto Rico 6
Malaysia 52 Greece 25 Peru 3
New Zealand 36 Switzerland 18
Indonesia 24 Turkey 15
Lebanon 10
Austria 8
Qatar 6
Bahrain 5
France 4
Oman 3
Cyprus 2
Total 1,106 248 161