Starbucks Corporation
Re: Starbucks August Same-Store
Sales Up 8 Percent

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By Goofyhoofy
October 1, 2004

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I believe I detected a breath of life coming from this horse, so I thought I would flog it one more time. Anyway, nobody's posted anything today, so consider this a time waster from yours truly, special 'delibery' for TheResultsKid.

Because it's about RESULTS.

Since McDonald's has been so lauded, you know, 30,000 locations and all, and all the real estate and everything, I thought I would look at RESULTS for McDonald's and contrast them with Starbucks.

These figures are from the McDonald's annual report, available at in PDF format, and likewise from the Starbucks annual report, also in PDF format at

I offer three lines of numbers for each: total revenues, operating income, and net income. There's no math here, just seeing a trend as you let your eye slide from right to left, ascending through the years, from 1995 to the most recent figures in the respective annual reports.

You can see McDonald's continues to build revenues nicely all throughout the period. But on the next line, they don't manage to convert that to income. In fact, whoa! We find that McDonald's is sporting roughly the same operating income today that they did in 1995. Net income? Hasn't changed in those eight years.

Now do the same exercise with Starbucks; note the nicely ascending total revenues year over year. Also note in the next line - and the next - that they continue to convert income into earnings on an increasing pace, consistent with the increase in revenues.

Oh. The charts:

McDonalds (in millions)
       2003   2002   2001   2000   1999   1998   1997   1996  1995
revs $17,140 15,406 14,870 14,243 13,259 12,421 11,409 10,687 9,795
op  $ 2,832  2,113  2,697  3,330  3,320  2,762  2,808  2,633 2,601
net $ 1,471    893  1,637  1,977 1,948  1,550  1,642  1,573 1,427

Starbucks (in millions)

       2003   2002   2001   2000   1999   1998   1997   1996  1995
revs $4,100  3,300  2,600  2,200  1,700  1,300  1,000    770   500
op   $  425    316    280    212    157     not shown on chart
net  $  268    213    180     94    101     68     55     42    26

Everybody hits a rough patch now and then. McDonald's number in 2002 is abysmal; Starbucks didn't have a great 2000. But McDonald's hasn't moved the meter much in eight years. I'm glad they have all that real estate; it's arguably a better investment than their burger franchise.

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