scorecardresearchStarbucks as a bank? Smell the coffee!

Starbucks as a bank? Smell the coffee!

Updated: 17 Mar 2022, 10:44 PM IST

Starbucks, your favourite coffee shop, is a form of unregulated bank with assets worth over 1.5 billion dollars. To know the reason behind this, go through the article.

Did You Know Starbucks is actually a bank?

Did You Know Starbucks is actually a bank?

There are a few things in our world that are so intertwined that using the two items or terms separately becomes impossible. One such pair is coffee and starbucks. When we hear the word "coffee," our minds immediately transport us to a Starbucks outlet, where the scent of coffee beans entices us to purchase one of our favourite beverages.

When the Great Recession hit America in 2008, this well-known brand didn't have it so easy. To address this, the firm restructured and named Howard Schultz as CEO, who is principally responsible for establishing Starbucks as a household name. Schultz implemented significant reforms in the firm, many of which are in use today. The Starbucks Rewards System was one of the schemes.

How does the Starbucks Reward System work?

Starbucks allows you to put money into your Starbucks Account on the App to make purchases digital and simpler. If you use the amount to purchase coffee, you will be awarded with reward points that may be claimed at a later time. Because Starbucks is such a global brand, 41% of its consumers pay with the Starbucks App.

According to sources, there is a total of $1.5 billion in all the accounts combined throughout the world.

As stated by experts, a wise investor never lets his money stay dormant and is continuously seeking for methods to expand his or her money. Similarly, rather than allowing the money in the Starbucks Account to lie unproductive, the firm opted to put it to work in its investment endeavours. As a result, everytime you deposit funds into the account, you're effectively lending your money to the company at 0 percent interest.

Customers cannot withdraw the funds in the app and can only utilise them to make coffee purchases. As a result, Starbucks is able to get around several financial laws that would otherwise apply to other institutions.

The coffee company has a total of $1.5 billion in assets whereas 85 percent of banks in the United States have less than $1 billion in assets. Starbucks' activities are therefore akin to those of an unrestrained bank.

The Starbucks Reward System is considered to be a brilliant move by the experts all over the world. It has aided the brand's growth even during economic downturns, as coffee shops are no longer completely reliant on market transactions. International banks are extremely concerned about the growth outlook of Starbucks in the finance space due to this act of brilliance.


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First Published: 04 Mar 2022, 04:42 PM IST