Howard Schultz

in the Northwest, when we were really at our peak, where the average customer was coming 18 times a month. I should rephrase it. Maybe the most loyal was coming 18 times a month.

in the Northwest, when we were really at our peak, where the average customer was coming 18 times a month. I should rephrase it. Maybe the most loyal was coming 18 times a month.

There's some magic to this idea that it's not a terribly expensive item. I think I saw some research that said that it's sub 1% of someone's household income, and often far less than that. But it is repeat, and it is high gross margin.

There's some magic to this idea that it's not a terribly expensive item. I think I saw some research that said that it's sub 1% of someone's household income, and often far less than that. But it is repeat, and it is high gross margin.

And so when you say lightning in a bottle, there's a cultural lightning in a bottle, but there's also this ridiculous business model where the way it shows up is your stores, basically from this point forward for all of Starbucks' life, you build a new store, and the profits from that store would totally cover the cost within two years, and often a year and a half.

And so when you say lightning in a bottle, there's a cultural lightning in a bottle, but there's also this ridiculous business model where the way it shows up is your stores, basically from this point forward for all of Starbucks' life, you build a new store, and the profits from that store would totally cover the cost within two years, and often a year and a half.

But I'll tell you the economic model that we applied to every single store we were opening. By the way, I chose the first 500 locations myself. So I was in it in so many ways. But the economic model in Wall Street, when we went public in 92, when they heard the model, we'd never seen a model like that. And the model basically was a sales to investment ratio of two to one.

But I'll tell you the economic model that we applied to every single store we were opening. By the way, I chose the first 500 locations myself. So I was in it in so many ways. But the economic model in Wall Street, when we went public in 92, when they heard the model, we'd never seen a model like that. And the model basically was a sales to investment ratio of two to one.

and a operating profit of 20%.

and a operating profit of 20%.

So what does that mean, sales to investment ratio?

So what does that mean, sales to investment ratio?

Yeah, yes. And the operating profit was north of 20%. Wow. So the cash on cash return was just- So yeah, you get that two years or less payback.

Yeah, yes. And the operating profit was north of 20%. Wow. So the cash on cash return was just- So yeah, you get that two years or less payback.

Early on, it became clear to us that customers were also starting to customize the beverage on their own. So we were just, barista was behind the counter and somebody would say, can you put something else in there? Yeah, what do you want? And then, so that just started, you know, the average ticket started growing as a result of the customers personalizing and customizing their beverage.

Early on, it became clear to us that customers were also starting to customize the beverage on their own. So we were just, barista was behind the counter and somebody would say, can you put something else in there? Yeah, what do you want? And then, so that just started, you know, the average ticket started growing as a result of the customers personalizing and customizing their beverage.

And to be clear, like the era of Starbucks we are in right now, you produce drip coffee and you produce espresso. And you can put that espresso in frothed milk. And that's basically your options. Yeah. Like none of this, you know.

And to be clear, like the era of Starbucks we are in right now, you produce drip coffee and you produce espresso. And you can put that espresso in frothed milk. And that's basically your options. Yeah. Like none of this, you know.

Yeah, exactly. But can I tell you a mistake I made?

Yeah, exactly. But can I tell you a mistake I made?