As of the company's most recent annual report, Starbucks (SBUX 1.00%) Rewards members have forked over more than $2 billion to the coffee powerhouse without getting a single Frappuccino for it -- at least not yet. On this episode of "Ask Us Anything" on Motley Fool Live, recorded on March 18, Fool.com contributors Jason Hall, Dan Caplinger, and Matthew Frankel discuss the impressive figure that is the "Starbucks float."
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Jason Hall: This is a number, this is from the annual report, let me see if I can find it off of their 10-Q. So their annual report was filed last, I think, November. It goes through October because of their fiscal year. Here it is, yeah, this is fun, I'm going to share two numbers. This is the one from as of Oct. 3, 2021, of their annual report, and is 1.596 billion. Now that same number as of Jan. 2 after the first quarter is 2.071 billion, and that's what I like to call the Starbucks float. Did you guys know that Starbucks has float?
Dan Caplinger: I did.
Jason Hall: I figure Dan would now. Matt knows this, but I don't think he realizes what I'm talking about. It's tied to what Jamie was talking about, that Starbucks Rewards program. What do people do with Starbucks? They give it their money, and like 50 bucks at a time or 100 bucks at a time, and then come back and spend that money over the next month or two or three, they load that prepaid Starbucks Rewards card. Starbucks has $2.071 billion, not all that, but that is on the line item in their liabilities, stored value card liability, and current portion of deferred revenue. Some of that is tied to the program itself. But basically that's your cash, Starbucks customers, that you've given Starbucks to use until you want to come redeem it, which is exactly what insurance float is, it is this incredible source of capital that Starbucks has that a lot of people don't realize. It's a pretty cool thing. Any reactions to that?
Matt Frankel: It's a really impressive figure. I mean, I think about half of that's mine, that I give to Starbucks every year. [laughs] It's just a really impressive number. They can't do much with it until people spend it. But it is free money to sit in a bank and earn interest for them. As interest rates rise, that could be a nice benefit.
