Starbucks (SBUX -1.16%) is one of the world's most iconic brands. So much so that the company has gradually removed the words "Starbucks" and "Coffee" from its logo to feature just the smiling siren.

Like Coca-Cola and McDonald's (MCD -0.22%), Starbucks has products that are consumed around the world. But despite the company's massive international expansion over the past few decades, Starbucks is a lot less exposed to global markets than you may realize. Here's why that matters as well as why the world's largest coffee chain could be a good buy now.

Two cups of coffee on a map of the world with a trail of beans connecting east to west.

Image source: Getty Images.

An international brand with a domestic focus

Investors often categorize companies based on their home country. Comparisons include Chinese stocks vs. U.S. stocks. Or investing in emerging markets in Africa vs. South America. Yet many U.S. companies -- from earthmoving equipment giant Caterpillar to McDonald's -- actually generate more revenue from outside the U.S. than inside it.

Looking at McDonald's for example, the U.S. contributed just 38% of total revenue and 41% of total 2021 operating income. The company closed the year with 40,031 stores, 13,438 of which -- or roughly a third -- are in the U.S. 

Starbucks also has a fair degree of international exposure, but much less than a company like McDonald's. In the first quarter of fiscal 2022, 22% of store revenue and 25% of store operating income came from its international segment, which sounds high but is quite low relative to Starbucks' store count.

It has 17,429 international Starbucks stores (over 5,500 in China), while just 16,888 are in North America. So despite having more international stores than domestic ones, Starbucks depends on its North American stores for the majority of its operating profit.

Why international exposure matters

International exposure has pros and cons. On one hand, access to markets outside the U.S. provides diversity in case the U.S. economy isn't doing well. But the biggest reason retail companies expand outside the U.S. is for growth. Given the size of China's population and its growing economy, it makes sense that it would be a great place to open Starbucks stores.

However, international exposure becomes a risk when supply-chain issues persist and geopolitical tensions are high. The U.S. Department of the Treasury's decision on Feb. 24 to freeze Russian assets and impose sanctions was momentous. Perhaps never before had a group of countries -- the U.S. and its allies -- essentially barred a country from the global financial system overnight. The Treasury Department then escalated those sanctions on April 6 with further restrictions on Russian assets, particularly in the financial services industry.

The subsequent exodus of U.S. companies out of Russia -- Starbucks and McDonald's included -- could set a precedent for future geopolitical issues. For Starbucks, the risk that is front and center is China's relationship with Taiwan, a close U.S. ally and a massive producer of semiconductors on which the U.S. depends. If China were to invade Taiwan, it may pressure companies to pull out of China, which would severely impact U.S. companies with high exposure there.

China is Starbucks' second-largest market. However, it makes up just 25% of its international store count. And again, international stores generate only 25% of Starbucks' operating income. Therefore, investors should view Starbucks' China exposure as meaningful but not nearly large enough to derail the investment thesis for the company.

Why Starbucks is a good buy now

Starbucks' risks, in a nutshell, have to do with the impact of inflation, ongoing COVID-19 issues, rising interest rates, potentially slowing economic growth, threats of unionization, and geopolitical risks. But if you go back in time in the 30 years that Starbucks stock has been publicly traded, chances are you'll find plenty of risks that could have been used as a reason to be pessimistic about it.

What Starbucks has that most companies only dream of having is an incredibly loyal customer base and one of the strongest brands in the world. That base and brand are timeless and would take years if not decades to erode. The data suggest that loyalty is only growing from here. Starbucks generated 53% of Q1 fiscal 2022 sales from Starbucks Rewards members. It is hard to imagine many other food and beverage businesses with a rewards program that is responsible for the majority of its sales.

Starbucks stock has a price-to-earnings ratio of 22 and a dividend yield of 2.4%. It's got the loyalty. It has the brand. It has a sizable dividend. And the stock is inexpensive. Those pros outweigh any cons the company is facing in the short to medium term.