How Much Did Schultz Buy Starbucks For?

Starbucks is among the globe's most recognized coffee brands, but it was a turning business deal that propelled it to global leadership. Howard Schultz, the individual who made Starbucks the behemoth it is today, did not start the company but bought it. Having an idea of how much Schultz paid for Starbucks and why he bought it informs us about how the brand developed into what it is today.

The Starbucks Business And Its Original Founders Before Howard Schultz Bought It

Jerry Baldwin, Gordon Bowker, and Zev Siegl established Starbucks in 1971 as a small Seattle-based coffee roasting firm. The plan was simple; be an equipment and coffee bean-selling company rather than a brewed coffee drink company. The firm had a loyal client base, but it remained a small regional company.

Schultz came on board at Starbucks in 1982 as director of retail and marketing, and was inspired by a visit to Italy, where he witnessed the vibe of the espresso bars. He envisioned Starbucks becoming a place where people would sit and greet each other while enjoying their coffee in a welcoming ambiance. The founders were not interested in moving away from their bean-retailing retail operations at all.

The Business Deal That Allowed Howard Schultz To Purchase Starbucks And Change Its Future

Schultz started executing his dream in 1985. He quit working for Starbucks, and started his own coffeehouse chain, naming it Il Giornale. Schultz's plan was to retail brewed coffee, not the actual beans, but his Starbucks dream was still at the back of his mind. When later in 1987 the founders declared that they were going to sell, Schultz caught the whiff of opportunity. He moved quickly, and bought Starbucks for $3.8 million, along with the name Starbucks, the six coffee shops, and the roasting facility. Schultz shut down Il Giornale, but retained the name Starbucks, and laid the groundwork for future expansion.

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How Howard Schultz Was Able To Raise The Money To Buy Starbucks And Fund His Vision

$3.8 million was a lot of money at that time, especially for a fairly young coffee company. Schultz had to raise funds with investors to make the deal happen. He was able to galvanize a lot of funds from a collection of investors, whom he had convinced of his vision. His ability to galvanize was very important to the closing of the transaction. As soon as he became the Chief Executive, Schultz did not hesitate to start building the brand. By stressing the importance of the creation of a brand identity for Starbucks as an experienced coffeehouse, Schultz developed the local company Starbucks into a multinational corporation.

The Massive Expansion Of Starbucks And Its Rapid Growth Under Howard Schultz’s Leadership

After Schultz purchased the company, he scaled Starbucks quickly. Starbucks had gone public in the early 1990s, which gave Starbucks added capital to expand. Starbucks expanded by opening new company stores with the first year in the United States and eventually expanded internationally. Schultz began introducing new products like Starbucks Rewards, seasonal products like the Pumpkin Spice Latte, and customer-experience focus. When it was purchased by Schultz, Starbucks was no longer a coffeehouse; Starbucks had made its way into the everyday life of everyone.

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The Huge Financial Impact Of Howard Schultz’s Decision To Buy Starbucks For $3.8 Million

The $3.8 million deal Schultz made to purchase Starbucks becomes one of the most profitable business deals in history. The current market capitalization of Starbucks is more than $100 billion, which is more than Schultz’s original investment. While leading Starbucks, he effectively transformed the company into the height of the coffee industry, changing the way people consumed coffee worldwide. Schultz has resigned as CEO a few times, but he was always involved with Starbucks and instituted himself at important periods in order to guide the company through these transitional periods. His involvement helped Starbucks to continue to grow and remain culturally relevant.

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The Lasting Legacy Of Howard Schultz’s Starbucks Purchase And Its Influence On The Coffee Industry

The 1987 acquisition of Starbucks changed Schultz's life and the coffee industry as a whole. His company's practices for business, customer service, and brand development created a new model that has been copied by other businesses. Schultz's desire to recognize the potential of a small coffee company and build it into a worldwide empire illustrates how, with his leadership and love of coffee culture, Schultz ensured that Starbucks would go from a coffee company to a brand.