Starbucks Is a Bank Disguised as a Coffee Shop

How does Starbucks make money? The Starbucks business model explained: it sells a $7 cup that costs less than $1 to make, but the real profit engine is something most customers never notice. Starbucks sits on roughly $1.7 billion of customer cash loaded onto gift cards and the app, an interest-free float. And every year it books around $200 million in breakage revenue, profit from money that is never spent at all. In this business documentary, we break down the full Starbucks money machine. Howard Schultz's journey from Xerox salesman to buying Starbucks for $3.8 million in 1987 after the Milan espresso bar trip the founders rejected. The third place strategy that turned stores into living rooms. Where your $7 actually goes: about $2 in labor, roughly 70 cents in rent, and about a dollar of operating profit. The 34 million member Rewards program that locks you in with prepaid balances. And the hidden profit centers: licensed store royalties and the $7 billion Nestle grocery deal. If you have ever wondered why Starbucks is so expensive, where the $7 latte money goes, or how a coffee chain became an unlicensed bank, this is the breakdown. Subscribe to Mintmark for a new business documentary every day. Next up: How Netflix Makes Money After Killing Password Sharing.