Starbucks 2008 Annual Report Download - page 10

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Retail sales mix by product type for Company-operated stores was as follows:
Fiscal Year Ended Sep 28, 2008 Sep 30, 2007 Oct 1, 2006
Beverages ...................................... 76% 75% 77%
Food.......................................... 17% 17% 15%
Coffee-making equipment and other merchandise ......... 4% 5% 5%
Whole bean coffees............................... 3% 3% 3%
Total.......................................... 100% 100% 100%
Specialty Operations
Specialty operations strive to develop the Company’s brands outside the Company-operated retail store environ-
ment 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 fiscal 2008, 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 — Retail stores
In its licensed retail store operations, the Company leverages the expertise of its local partners and shares Starbucks
operating and store development experience. Licensee partners provide improved and, at times, the only access to
desirable retail space. Most licensees are prominent retailers with in-depth market knowledge and access. As part of
these arrangements, Starbucks receives license fees and royalties and sells coffee, tea and related products for resale
in licensed locations. Employees working in licensed retail locations are required to follow Starbucks detailed store
operating procedures and attend training classes similar to those given to employees in Company-operated stores.
During fiscal 2008, 438 Starbucks licensed retail stores were opened in the United States and, as of September 28,
2008, the Company’s US licensees operated 4,329 stores. During fiscal 2008, 550 International licensed stores were
opened. At September 28, 2008, the Company’s International operating segment had a total of 3,134 licensed retail
stores. Product sales to and royalty and license fee revenues from US and International licensed retail stores
accounted for 48% of specialty revenues in fiscal 2008.
At fiscal year end 2008, Starbucks total licensed retail stores by region and specific location were as follows:
Asia Pacific Europe/Middle East/Africa Americas
Japan .............. 814 Turkey ............. 107 United States . ........ 4,329
China .............. 269 Spain .............. 76 Mexico ............. 241
South Korea ......... 254 Greece ............. 76 Canada ............. 231
Taiwan ............. 221 United Arab Emirates . . 69 Other .............. 44
Philippines .......... 150 Saudi Arabia ......... 65
Malaysia ............ 113 Kuwait ............. 57
Indonesia ........... 69 France.............. 46
New Zealand ......... 43 Switzerland .......... 42
Other .............. 147
Total . .............. 1,933 Total ............... 685 Total ............... 4,845
Licensing — Packaged coffee and tea
Through a licensing relationship with Kraft Foods, Inc. (“Kraft”), the Company sells a selection of Starbucks and
Seattle’s Best Coffee branded packaged coffees and Tazo»teas in grocery and warehouse club stores throughout the
United States. Kraft manages all distribution, marketing, advertising and promotion of these products.
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