Starbucks is a household name in coffee and the premier retailer and roaster of specialty coffee worldwide. A publicly traded company since 1992, we have been paying a dividend since 2010, increasing annually since 2011. We operate almost 30,000 locations in 75 countries and netted $24.7 billion in revenue for 52 weeks ending October 2018.
Starbucks brought the Italian coffeehouse experience to the United States almost 35 years ago when CEO (and future presidential hopeful) Howard Schultz was so inspired he initially created fine coffee house chain “Il Giornale”, eventually folding to purchase Starbucks and unite it with his vision. Every element of a visit to Starbucks is carefully detailed to the customer, from exclusive music to interaction both personal and virtual. It’s not uncommon that our stores are a place of gathering for the community.
The foundation of the Starbucks experience is great coffee and a great sense of community. We roast and supply our own coffee, so this is a worldwide endeavor. We’re committed to the sustenance of our coffee farms and the training of our farmers, investing heavily in both as well as our logistics chain which is centered in key strategic worldwide areas to ensure the highest efficiency possible. Investment at the community level is critical to our mission as well, with several nationwide youth training programs, specialized community stores, and stores customized to nearby military bases. We even closed 8,000 company stores to train our employees in 2018, viewing our $12 million in lost revenue as an investment in our community and employees, where we’re routinely listed as one of the best places to work in the country.
In the future Starbucks looks to expand its mission from great coffeehouse experiences to great at-home experiences (through our strategic partnership with Nestle). We continue to be on the cutting edge of innovation (nearly a quarter of all orders are through our mobile app) and we continue to bring our mission to our worldwide segments particularly our CAP (China, Asia-Pacific). Our immediate goal is to bring customers back throughout the day with lunch and evening selections and expand our at-home brand with Nestle.
To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.
With our partners, our coffee and our customers at our core, we live these values:
· Creating a culture of warmth and belonging, where everyone is welcome.
· Acting with courage, challenging the status quo and finding new ways to grow our company and each other.
· Being present, connecting with transparency, dignity and respect.
· Delivering our very best in all we do, holding ourselves accountable for results.
· We are performance driven, through the lens of humanity.
Our objective is to maintain Starbucks standing as one of the most recognized and respected brands in the world. To achieve this, we are continuing the disciplined expansion of our global store base, adding stores in both existing, developed markets such as the U.S., and in newer, higher growth markets such as China, as well as optimizing the mix of company-operated and licensed stores around the world. In addition, by leveraging the experience gained through our traditional store model, we continue to offer consumers new coffee and other products in a variety of forms, across new categories, diverse channels and alternative store formats. We also believe our Starbucks Global Social Impact strategy, commitments related to ethically sourcing high-quality coffee, contributing positively to the communities we do business in and being an employer of choice are contributors to our objective.
Starbucks started as a single store in Seattle’s Pike Place market in 1971 by founders Jerry Baldwin, Gordon Bowker and Zev Siegl. Howard Schultz, who was a general manager for Hammarplast (a company who sold coffee makers to Starbucks) visited the store in 1981. He would become CEO from 1986 until 2000, and again from 2008-2016. Schultz, inspired by his tours of coffeehouses in Italy, created Starbucks to be an experience. Today Starbucks is not only committed to great coffee but great café fare as well as carefully chosen music. It’s designed as a meeting place, for working or leisure, and honored to be in the daily routine of so many.
Starbucks is committed to selling the finest whole bean coffees and coffee beverages. To ensure compliance with our rigorous coffee standards, we control coffee purchasing, roasting and packaging and the global distribution of coffee used in our operations. We purchase green coffee beans from multiple coffee-producing regions around the world and custom roast them to our exacting standards for our many blends and single origin coffees.
To help ensure the future supply of high-quality green coffee and to reinforce our leadership role in the coffee industry, Starbucks operates nine farmer support centers. The farmer support centers are staffed with agronomists and sustainability experts who work with coffee farming communities to promote best practices in coffee production designed to improve both coffee quality, yields and agronomy support to address climate and other impacts. In addition to coffee, we also purchase significant amounts of dairy products, particularly fluid milk, to support the needs of company-operated stores. Products other than whole bean coffees and coffee beverages sold in Starbucks stores include tea and a number of ready-to-drink beverages that are purchased from several specialty suppliers, usually under long-term supply contracts. Food products, such as pastries, breakfast sandwiches and lunch items, are purchased from national, regional and local sources. We also purchase a broad range of paper and plastic products, such as cups and cutlery, from several companies to support the needs of our retail stores as well as our manufacturing and distribution operations.
Starbucks’ key suppliers are based in the United States, Singapore, Hong Kong, Mexico, Indonesia, India, France, Canada and other countries. The largest suppliers include Regency Centers and First Capital Realty who lease property to Starbucks. Tingyi Cayman Islands Holing Corp. (Master Kong) manufactures and markets Starbucks’ ready-to-drink products in the People’s Republic of China. Dean Foods supplies milk.
According to our latest SEC filing, Starbucks is making $24.7 billion in revenue. Our partnership with Nestle in Channel Development to sell and market foodservice and CPG products worldwide experienced $2.2 billion in net revenue in 2017.
Nestlé will obtain the rights to market, sell, and distribute Starbucks, Seattle’s Best Coffee, Starbucks Reserve, Teavana, Starbucks VIA, and Torrefazione Italia packaged coffee and tea in all global at-home and away-from-home channels. Nestlé will pay Starbucks $7.15 billion in closing consideration, and Starbucks will retain a significant stake as licensor and supplier of roast and ground and other products going forward. Additionally, the Starbucks brand portfolio will be represented on Nestlé’s single-serve capsule systems.
Kevin R. Johnson has served as president and chief executive officer since April 2017 and has been a Starbucks director since March 2009. Mr. Johnson served as president and chief operating officer from March 2015 to April 2017. Mr. Johnson served as Chief Executive Officer of Juniper Networks, Inc., a leading provider of high-performance networking products and services, from September 2008 to December 2013. He also served on the Board of Directors of Juniper Networks from September 2008 through February 2014. Prior to joining Juniper Networks, Mr. Johnson served as President, Platforms and Services Division for Microsoft Corporation, a worldwide provider of software, services and solutions. Mr. Johnson was a member of Microsoft’s Senior Leadership Team and held a number of senior executive positions over the course of his 16 years at Microsoft. Prior to joining Microsoft in 1992, Mr. Johnson worked in International Business Machine Corp.’s systems integration and consulting business.
Rosalind G. Brewer has served as group president, Americas and chief operating officer since October 2017, and has been a director of Starbucks since March 2017. Ms. Brewer served as President and Chief Executive Officer of Sam's Club, a membership-only retail warehouse club and a division of Walmart Inc., from February 2012 to February 2017. Previously, Ms. Brewer was Executive Vice President and President of Walmart's East Business Unit from February 2011 to January 2012; Executive Vice President and President of Walmart South from February 2010 to February 2011; Senior Vice President and Division President of the Southeast Operating Division from March 2007 to January 2010; and Regional General Manager, Georgia Operations, from 2006 to February 2007. Prior to joining Walmart, Ms. Brewer was President of Global Nonwovens Division for Kimberly-Clark Corporation, a global health and hygiene products company, from 2004 to 2006 and held various management positions at Kimberly-Clark Corporation from 1984 to 2006. She serves as the Chair of the Board of Trustees for Spelman College and formerly served on the Board of Directors for Lockheed Martin Corporation and Molson Coors Brewing Company.
Cliff Burrows joined Starbucks in April 2001 and has served as group president, Siren Retail, since September 2016, which includes the Starbucks Reserve Roastery & Tasting Rooms, Starbucks Reserve brand and Princi operations. From July 2015 to September 2016, he served as group president, U.S. and Americas. From February 2014 to June 2015, he served as group president, U.S., Americas and Teavana. From May 2013 to February 2014, he served as group president, Americas and U.S., EMEA (Europe, Middle East and Africa) and Teavana. Mr. Burrows served as president, Starbucks Coffee Americas and U.S. from October 2011 to May 2013 and as president, Starbucks Coffee U.S. from March 2008 to October 2011. He served as president, EMEA from April 2006 to March 2008. He served as vice president and managing director, U.K. prior to April 2006. Prior to joining Starbucks, Mr. Burrows served in various management positions with Habitat Designs Limited, a furniture and housewares retailer.
John Culver joined Starbucks in August 2002 and has served as group president, International, Channel Development and Global Coffee & Tea, since July 2018. From October 2017 to July 2018, Mr. Culver served as group president, International and Channels. From September 2016 to October 2017, he served as group president, Starbucks Global Retail. From May 2013 to September 2016, he served as group president, China, Asia Pacific, Channel Development and Emerging Brands. Mr. Culver served as president, Starbucks Coffee China and Asia Pacific from October 2011 to May 2013. From December 2009 to October 2011, he served as president, Starbucks Coffee International. Mr. Culver served as executive vice president; president, Global Consumer Products, Foodservice and Seattle’s Best Coffee from February 2009 to September 2009, and then as president, Global Consumer Products and Foodservice from October 2009 to November 2009. He previously served as senior vice president; president, Starbucks Coffee Asia Pacific from January 2007 to February 2009, and vice president; general manager, Foodservice from August 2002 to January 2007.
Rachel A. Gonzalez joined Starbucks and has served as executive vice president, general counsel and secretary since joining z Starbucks in April 2018. Prior to joining Starbucks, Ms. Gonzalez served as executive vice president and chief administrative officer of Sabre Corporation, a technology provider to the travel industry, from May 2017 to April 2018 and as Sabre’s executive vice president and general counsel from September 2014 to May 2017. From March 2013 to September 2014, Ms. Gonzalez served as executive vice president, general counsel and corporate secretary of Dean Foods Company, a food and beverage company, and as its executive vice president, general counsel designate from November 2012 to March 2013. She served as chief counsel, corporate and securities of Dean Foods from 2008 to November 2012. From 2006 to 2008, Ms. Gonzalez served as senior vice president and group counsel for Affiliated Computer Services, Inc., an information technology service provider. Prior to that, Ms. Gonzalez was a partner with the law firm of Morgan, Lewis & Bockius LLP, where she focused on corporate finance, mergers and acquisitions, SEC compliance and corporate governance. Ms. Gonzalez serves on the Board of Directors of Dana Incorporated.
Patrick J. Grismer joined Starbucks in November 2018, as executive vice president, effective November 12, 2018 and will be r executive vice president, chief financial officer and chief accounting officer, effective November 30, 2018. From March 2016 to November 2018, Mr. Grismer served as Executive Vice President, Chief Financial Officer of Hyatt Hotels Corporation, a global hospitality company. From May 2012 to February 2016, Mr. Grismer served as Chief Financial Officer at Yum! Brands, Inc., a global restaurant company. He previously held a number of roles at Yum!, including Chief Planning and Control Officer and Chief Financial Officer for Yum! Restaurants International. Prior to that, Mr. Grismer served in various roles at The Walt Disney Company including Vice President, Business Planning and Development for The Disneyland Resort and Chief Financial Officer for the Disney Vacation Club. Mr. Grismer began his career with Price Waterhouse.
Lucy Lee Helm joined Starbucks in September 1999, and has served as executive vice president, chief partner officer since August 2017. From May 2012 to August 2017, Ms. Helm served as executive vice president, general counsel and secretary. She served as senior vice president and deputy general counsel from October 2007 to April 2012 and served as interim general counsel and secretary from April 2012 to May 2012. Ms. Helm previously served as vice president, assistant general counsel from June 2002 to September 2007 and as director, corporate counsel from September 1999 to May 2002. During her tenure at Starbucks, Ms. Helm has led various teams of the Starbucks legal department, including the Litigation and Brand protection team, the Global Business (Commercial) team and the Litigation and Employment team. Prior to joining Starbucks, Ms. Helm was a principal at the Seattle law firm of Riddell Williams P.S. from 1990 to 1999, where she was a trial lawyer specializing in commercial, insurance coverage and environmental litigation.
Scott Maw joined Starbucks in August 2011, and has served as executive vice president, chief financial officer since February 2014. He will retire from the Company on November 30, 2018. From October 2012 to February 2014, he served as senior vice president, Corporate Finance and as corporate controller from August 2011 to October 2012. Prior to joining Starbucks, Mr. Maw served as chief financial officer of SeaBright Insurance Company from February 2010 to August 2011. From October 2008 to February 2010, Mr. Maw served as chief financial officer of the Consumer Banking division of JPMorgan Chase & Co., having held a similar position at Washington Mutual Bank prior to its acquisition by Chase. From 1994 to 2003, he served in various finance leadership positions at General Electric Company. Mr. Maw serves on the Board of Directors of Avista Corporation.
Vivek Varma joined Starbucks in September of 2008, and has served as executive vice president, Public Affairs since May 2010. From September 2008 to May 2010, Mr. Varma served as senior vice president, Public Affairs. Prior to joining Starbucks, Mr. Varma was general manager of communications and public relations for the Platforms and Services Division of Microsoft Corporation, a worldwide provider of software, services and solutions, from April 2006 to September 2008. From January 2002 to April 2006, Mr. Varma served in several other positions with Microsoft, including as senior director of corporate communications and public relations in Microsoft’s Corporate Marketing Group.
Starbucks continues to improve its corporate social responsibility practices to address the concerns of different stakeholder groups. The following are the main stakeholders in Starbucks Coffee’s business:
· Employees (baristas, partners)
· Customers
· Suppliers (supply firms, coffee farmers)
· Environment
· Investors
· Governments
Starbucks is a Corporation with a matrix organizational structure, involving intersections among various components of the business. For example, the company’s product-based divisions intersect with functional groups and geographic divisions, which in turn intersect with other parts of the organization. The following are the main features of Starbucks Coffee’s corporate structure:
· Functional hierarchy
· Geographic divisions
· Product-based divisions
· Teams
Howard Schultz is the founder, former chief executive officer (CEO), and single-largest shareholder of Starbucks. Schultz holds 33 million shares directly and 1.7 million shares indirectly through trusts as of Jun. 26, 2018.
Mellody Hobson is the president of Ariel Investments LLC, a Chicago-based investment firm, and the second-largest shareholder of the company. Hobson owns 246,000 shares of the company directly and another 283,146 shares indirectly through a trust as of Aug. 15, 2018.
John Culver is the group president of Global Retail at Starbucks and the company's third-largest shareholder with 366,402 shares held directly as of Nov. 16, 2018.
Clifford Burrows is Starbucks' group president of Siren Retail and the company's fourth-largest individual shareholder with 248,225 shares as of Nov. 16, 2018.
Starbucks intends to use the after-tax proceeds from Nestle’s up-front $7.2 billion payment primarily to accelerate share buybacks and now expects to return approximately $20 billion in cash to shareholders in the form of share buybacks and dividends through fiscal year 2020. Additionally, the transaction is expected to be earnings per share (EPS) accretive by the end of fiscal year 2021 or sooner, with no change to the company’s currently stated long-term financial targets.
To sustain our business and the changing world around it, Starbucks has the following goals:
· 100% sustainable coffee by 2020
· 100% ethically sourced tea by 2020
· Greener packaging and cups
· Most LEED certified stores worldwide: largest green retailer
· $140 million commitment to renewable energy
Starbucks is proud of our continuing pledge to improve the communities we serve, including 78,000 hours of community service in 2018 from local stores. Our FoodShare program has rescued 10 million lbs. of food. We have 50 Military Family Stores all near major military bases. We’ve also closed 8,000 stores for anti-bias training and 12 Community Stores held youth training services.
By the end of 2018 Starbucks had closed all its underperforming 379 Teavana and 23 La Boulange locations. The profitable Teavana product will continue to be sold in stores and distributed as ready-to-drink to a partnership with Anheuser-Busch InBev.
Starbucks continues to strive to boost afternoon and evening store sales as well as compete in the upscale coffee experience. Originally slated to open 1,000 Reserve Roasterie stores, Starbucks will begin by opening 6-10 Roasteries and growing our Princi bakery experience, adding to our sole location in New York City.
We have four reportable operating segments:
Americas, which is inclusive of the U.S., Canada, and Latin America;
China/Asia Pacific (CAP)
Europe, Middle East, and Africa (EMEA) and
Channel Development
We also have several nonreportable operating segments, including Siren Retail, which consists of Starbucks Reserve Roastery & Tasting Rooms, Starbucks Reserve brand stores and products and Princi operations, as well as Evolution Fresh and the Teavana retail business which substantially ceased operations during fiscal 2018. Collectively, the combined group of non-reportable operating segments is reported within Corporate and Other. Revenues from our reportable segments and Corporate and Other as a percentage of total net revenues for fiscal 2018 were as follows: Americas (68%), CAP (18%), EMEA (4%), Channel Development (9%) and Corporate and Other (1%).
Our future growth increasingly depends on the growth and sustained profitability of certain international markets. Some or all our international market business units (“MBUs”), which we generally define by the countries in which they operate, may not be successful in their operations or in achieving expected growth, which ultimately requires achieving consistent, stable net revenues and earnings. The performance of these international operations may be adversely affected by economic downturns in one or more of the countries in which our large MBUs operate. A decline in performance of one or more of our significant international MBUs could have a material adverse impact on our consolidated results.
The CAP segment is now one of our two significant profit centers driving our global returns, along with our Americas segment. In particular, our China MBU contributes meaningfully to both consolidated and CAP net revenues and earnings. China is currently our fastest growing market and second largest market overall. With our recent acquisition of the East China business, the China market is now 100% company owned and, along with the U.S. market. Due to the significance of our China market for our profit and growth, we are exposed to risks in China, including the risks mentioned elsewhere below and the following:
• the effects of current U.S.-China relations, including rounds of tariff increases and retaliations and increasing restrictive regulations, potential boycotts and increasing anti-Americanism;
• entry of new competitors to the specialty coffee market in China;
• changes in economic conditions in China and potential negative effects to the growth of its middle class, wages, labor, inflation discretionary spending and real estate and supply chain costs;
• ongoing government regulatory reform, including relating to food safety, tariffs and tax, bringing uncertainty and inconsistent interpretations, which may be contrary to ours, as well as potential significant increases in compliance costs;
• food-safety related matters, including compliance with food-safety regulations and ability to ensure product quality and safety; and • the ability to successfully integrate the East China business.
Competition
Our primary competitors for coffee beverage sales are specialty coffee shops offering premium and artisanal products and experiences. In almost all markets in which we do business, there are numerous competitors in the specialty coffee beverage business. We believe that our customers choose among specialty coffee retailers primarily on the basis of product quality, service and convenience, as well as price. We continue to experience direct competition from large competitors in the U.S. quick-service restaurant sector and the U.S. ready-to-drink coffee beverage market, in addition to well-established companies in many international markets. We also compete with restaurants and other specialty retailers for prime retail locations and qualified personnel to operate both new and existing stores. Our coffee and tea products sold through our Channel Development segment compete directly against specialty coffees and teas sold through grocery stores, warehouse clubs, specialty retailers, convenience stores and foodservice accounts and compete indirectly against all other coffees and teas on the market.
The specialty coffee market is intensely competitive, including with respect to product quality, innovation, service, convenience, such as delivery service and mobile ordering, and price, and we face significant and increasing competition in all these areas in each of our channels and markets. Accordingly, we do not have leadership positions in all channels and markets. In the U.S., the ongoing focus by large competitors in the quick-service restaurant sector on selling high-quality specialty coffee beverages could lead to decreases in customer traffic to Starbucks stores and/or average value per transaction adversely affecting our sales and results of operations. Similarly, continued competition from well-established competitors, or competition from large new entrants or well-funded smaller companies in our domestic and international markets could hinder growth and adversely affect our sales and results of operations in those markets. Many small competitors also continue to open coffee specialty stores in many of our markets across the world, which in the aggregate may also lead to significant decreases of customer traffic to our stores in those markets. Increased competition globally in packaged coffee and tea and single-serve and ready-to-drink coffee beverage markets, including from new and large entrants to this market could adversely affect the profitability of the Channel Development segment. Furthermore, declines in general consumer demand for specialty coffee products for any reason, including due to consumer preference for other products or flattening demand for our products, could have a negative effect on our business.
Our leading competition includes Dunkin Donuts, Costa (largest in UK), Café Coffee Day (largest arabica beans producer and exporter in Asia), McDonalds and McCafe, and in the home brew segment, Folgers and Maxwell House.
Our Frappucino sales are down 3%, falling in succession the last few years. To market to an increasingly health-conscious customer base Starbucks will develop new healthier drinks.
To help boost sales, Starbucks will develop more healthy drinks, like low-sugar iced tea, for an increasingly health-conscious customer base. The company said that so far in 2018, Frappucino sales have fallen by 3%. Last year, sales of the sugary blended beverage were up 4%, compared to 5% in 2016 and 17% in 2015.
Men and Women aged 25-40 count for 49% of our business. Our next largest demographic are young adults (18-24) who take up 40% of business. We continue to have a strong base of socially conscious customers.
Specialty coffee drinks are 75% of sales, with 11% of sales by mobile order. We see mobile order as a very large trend in its convenience and that it decreases wait time for customers who are discourages by traffic inside the store. Mobile orders also create a personal relationship with the customer and create loyalty incentives and an individual marketing experience.
The restaurant industry is 4% of US GDP. Americans (68% or our net revenue) give 51% of their food dollars to restaurants as of 2019. Total retail and food services totaled $5.75 trillion, up from $4 trillion last ten years. Over 80% of households are buying organic products to the tune of $50 billion and we feel we have roots in that trend with our socially conscious buyers.
Starbucks is in the limited service segment of the restaurant industry, a segment that leads its full-service counterparts in sales. Since people are trending toward convenience and eating outside of where they buy, we are experiencing competition from local grocers and convenience stores with ready-to-eat food. Also rising minimum wages will cause us to adjust profit margins. Starbucks’ mobile app has 17 million users and personalizes orders to meet the more convenient demands of the public.
Our solar farm in North Carolina (the size of 285 football fields) is now up and running.
The farm, acre upon acre of 140,000 glittering solar panels, delivers enough clean energy to power the equivalent of the energy consumed by 600 Starbucks stores in North Carolina, Virginia, Delaware, Kentucky, Maryland, West Virginia and Washington, D.C.
Closer to headquarters, Starbucks plans to harness wind energy from turbines that will be built near Olympia, Wash., to power 116 Seattle-area stores and the Kent Roasting Plant. That project is scheduled to begin in 2019, the same year that a new wind farm in Illinois will start powering 360 stores in that state, including the future Chicago Roastery. A $140 million investment in renewable energy. Over the past two years, Starbucks has invested more than $140 million in renewable energy. Starbucks purchases enough renewable energy to power 100 percent of its more than 9,000 company-operated stores in the U.S. and Canada with clean energy, an achievement it first notched in 2015. Globally, 62% of Starbucks operations are powered by renewables.
Starbucks decided to develop a strategy to reduce its emissions. Renewable energy is at the heart of that strategy because it doesn’t generate greenhouse gases, which come from the burning of fossil fuels.
Starbucks began by purchasing 5 percent renewable energy in 2005; within a decade, it was purchasing a kilowatt of renewable “green” energy for every kilowatt of “brown” electricity used — traditional fossil fuel-based energy such as coal and natural gas.
To ensure compliance with our rigorous coffee standards, we control coffee purchasing, roasting and packaging and the global distribution of coffee used in our operations. We purchase green coffee beans from multiple coffee-producing regions around the world and custom roast them to our exacting standards for our many blends and single origin coffees.
We depend upon our relationships with coffee producers, outside trading companies and exporters for our supply of green coffee. We believe, based on relationships established with our suppliers, the risk of non-delivery on such purchase commitments is remote. To help ensure the future supply of high-quality green coffee and to reinforce our leadership role in the coffee industry, Starbucks operates nine farmer support centers. The farmer support centers are staffed with agronomists and sustainability experts who work with coffee farming communities to promote best practices in coffee production designed to improve both coffee quality, yields and agronomy support to address climate and other impacts.
In addition to coffee, we also purchase significant amounts of dairy products, particularly fluid milk, to support the needs of our f company-operated stores. We believe, based on relationships established with our dairy suppliers, that the risk of non-delivery of sufficient fluid milk to support our stores is remote. Products other than whole bean coffees and coffee beverages sold in Starbucks stores include tea and a number of ready-to-drink beverages that are purchased from several specialty suppliers, usually under long-term supply contracts. Food products, such as pastries, breakfast sandwiches and lunch items, are purchased from national, regional and local sources. We also purchase a broad range of paper and plastic products, such as cups and cutlery, from several companies to support the needs of our retail stores as well as our manufacturing and distribution operations. We believe, based on relationships established with these suppliers and manufacturers, that the risk of non-delivery of sufficient amounts of these items is remote.
Our supply chain spans over nineteen countries, however centered around only 6 roasting centers, to streamline delivery. Starbucks makes over 70,000 deliveries daily and has nine strategically placed global distribution centers worldwide: 5 in the U.S. 2 in Asia and 2 in Europe. We have a four-point scorecard to account for supply-chain efficiency:
Operational Safety
Timely delivery and rates of order-fill
Total supply chain costs
Enterprise savings
Starbucks employed approximately 291,000 people worldwide as of September 30, 2018. In the U.S., Starbucks employed approximately 191,000 people, with approximately 183,000 in company-operated stores and the remainder in support facilities, store development, and roasting, manufacturing, warehousing and distribution operations. Approximately 100,000 employees were employed outside of the U.S., with approximately 97,000 in company-operated stores and the remainder in regional support operations. The number of Starbucks employees represented by unions is not significant. We believe our current relations with our employees are good.
Much of our future success depends on the continued availability and service of senior management personnel. The loss of any of our executive officers or other key senior management personnel could harm our business. We must continue to recruit, retain and motivate management and other employees sufficiently, both to maintain our current business and to execute our strategic initiatives, some of which involve ongoing expansion in business channels outside of our traditional company operated store model. Our success also depends substantially on the contributions and abilities of our retail store employees whom we rely on to give customers a superior in-store experience and elevate our brand. Accordingly, our performance depends on our ability to recruit and retain high quality employees to work in and manage our stores, both domestically and internationally. Our ability to attract and retain both corporate and retail personnel is also acutely impacted in certain international and domestic markets where the competition for a relatively small number of qualified employees is intense or in markets where large high-tech companies are able to offer more competitive salaries and benefits, as well as where there is a strong economy with many available jobs and intense competition for the available workforce. Additionally, there is intense competition for qualified technology systems developers necessary to develop and implement new technologies for our growth initiatives, including increasing our digital relationships with customers.
Starbucks Global Social Impact strategy, commitments related to ethically sourcing high-quality coffee, contributing positively to the communities we do business in and being an employer of choice are contributors to our objective.
Starbucks controls it’s entire coffee-supply chain, with worldwide roasting and distribution centers. We’ve donated 31 million coffee trees in the last three years to Central America, provided loans to farmers in 14 countries and will continue to train farmers, reaching 200,000 by the start of the new decade.
Starbucks relies heavily on information technology systems to provide analytics for use in sales and marketing. With 17 million active users on our mobile app we have an extraordinary resource to test and collect data. In 90 million transaction a week we have all the sample size needed to break down how customers buy and personalize promotions to those trends.
The Starbucks Card, our branded stored value card program, is designed to provide customers with a convenient payment method, support gifting and increase the frequency of store visits by cardholders, in part through the related Starbucks Rewards™ loyalty program where available, as discussed below. Stored value cards are issued to customers when they initially load them with an account balance. They can be obtained in our company-operated and most licensed stores in North America, China, Japan, Latin America, and many of our markets in our CAP and EMEA segments. Stored value cards can also be obtained on-line, via the Starbucks® Mobile App, and through other U.S. and international retailers. Customers may access their card balances by utilizing their stored value card or the Starbucks Mobile App in participating stores. Using the Mobile Order and Pay functionality of the Starbucks Mobile App, customers can also place orders in advance for pick-up at certain participating locations in the U.S. and Canada. In nearly all markets, including the U.S. and Canada, customers who register their Starbucks Cards are automatically enrolled in the Starbucks Reward program. Registered members can receive various benefits depending on factors such as the number of reward points (“Stars”) earned.
Starbucks Rewards loyalty program grew to 17.2 million active members in the U.S. 2019, up 14% year-over-year.
Starbucks uses Atlas, a mapping and business intelligence tool developed by Esri, to provide scientific insight into projecting performance geographically. Atlas analyzes traffic patterns, population density and demographics but it can even show the proximity of other stores to a selected location and project the impact to those stores should another one open.
Our financial performance is highly dependent on our Americas operating segment, as it comprised approximately 68% of consolidated total net revenues in fiscal 2018.
Our strategy for expanding our global retail business is to increase our market share in a disciplined manner, by selectively opening additional stores in new and existing markets, as well as increasing sales in existing stores, to support our long-term strategic objective to maintain Starbucks standing as one of the most recognized and respected brands in the world. Store growth in specific existing markets will vary due to many factors, including expected financial returns, the maturity of the market, economic conditions, consumer behavior and local business practices.
Starbucks largest acquisition to date affects our CAP segment. As a result of acquiring the remaining interest in our East China joint venture at the end of the first quarter of fiscal 2018, we began recording 100% of its revenues and expenses on our consolidated statements of earnings at the beginning of the second quarter of fiscal 2018. This is in contrast with our previous joint venture model, where we recorded only revenues and expenses from products sales to and royalties received from East China, as well as our proportionate share of the joint venture's net profit. The change from equity method to consolidation method lowered the operating margin of our Consolidated and CAP segment, primarily due to incremental depreciation and amortization expenses and lower income from equity investees. Starbucks results for fiscal 2018 continued to demonstrate the strength of our global business model and our ability to successfully make disciplined investments in our business and our partners. Consolidated total net revenues increased 10% to $24.7 billion, primarily driven by incremental revenues from 1,997 net new store openings over the past 12 months, incremental revenues from the impact of our ownership change in East China, 2% growth in global comparable store sales and favorable foreign currency translation.
a) Hedging, forward pricing, options
Depending on market conditions, we may enter into coffee futures contracts and collars to hedge a portion of anticipated cash flows under our price-to-be-fixed green coffee contracts, which are described further in Note 5, Inventories. To mitigate the price uncertainty of a portion of our future purchases, primarily of dairy products, diesel fuel and other commodities, we enter into swap contracts, futures and collars that are not designated as hedging instruments.
To hedge the variability in cash flows due to changes in benchmark interest rates, we enter into interest rate swap agreements related to anticipated debt issuances. These agreements are cash settled at the time of the pricing of the related debt. To hedge the exposure to changes in the fair value of our fixed-rate debt, we enter into interest rate swap agreements, which are designated as fair value hedges.
To reduce cash flow volatility from foreign currency fluctuations, we enter into forward and swap contracts to hedge portions of cash flows of anticipated intercompany royalty payments, inventory purchases and intercompany borrowing and lending activities. To mitigate foreign currency transaction risk of intercompany borrowings, we enter into cross-currency swap contracts, which are designated as cash flow hedges.
b) Contracting
On March 23, 2018, we sold our company-operated retail store assets and operations in Brazil to SouthRock, converting these operations to a fully licensed market, for a total of $48.2 million. This transaction resulted in an insignificant pre-tax loss.
On December 31, 2017, we sold our 50% interest in President Starbucks Coffee Taiwan Limited, our joint venture operations in Taiwan, to UPG for approximately $181.2 million. The transaction resulted in a pre-tax gain of $156.6 million.
On December 11, 2017, we sold the assets associated with our Tazo brand to Unilever for a total of $383.8 million. The transaction resulted in a pre-tax gain of $347.9 million.
c) Insurance
We use a combination of insurance and self-insurance mechanisms, including a wholly-owned captive insurance entity and participation in a reinsurance treaty, to provide for the potential liabilities for certain risks, including workers’ compensation, healthcare benefits, general liability, property insurance and director and officers’ liability insurance. Liabilities associated with the risks that are retained by us are not discounted and are estimated, in part, by considering historical claims experience, demographics, exposure and severity factors and other actuarial assumptions.
Customer satisfaction
Produced by the University of Michigan’s Ross School of Business, in partnership with the American Society for Quality (ASQ) and CFI Group, the American Customer Satisfaction Index is a national economic indicator of customer evaluations of the quality of products and services available to household consumers in the United States. Starbucks is perennially among the top rated limited-service restaurants, tops in 2008. In 2019 Starbucks experienced a 1.3% increase in rating from previous.
Sustenance
We know that designing and building green stores is not only environmentally responsible, it is good business. We already operate more than 1,600 LEED-certified stores around the world, making us the world’s largest green retailer. We are building on that legacy by developing a new Greener Store framework for 10,000 stores globally by 2025, which could save $50 million in utilities costs over the next 10 years.
Over the past two years, Starbucks has committed to more than $140 million in renewable energy to power our stores, reducing our environmental impact and supporting access to green power. It’s enough to power 100 percent of our more than 9,000 company-operated stores in the United States, and 77 percent of our global operations. We plan to locally source more than 50 percent of our renewable energy in the U.S by 2020, including from our new solar farm in North Carolina, which delivers enough clean energy to power the equivalent of the energy consumed by 600 Starbucks stores. And we are partnering with developers to bring new projects online, including a wind farm planned near Olympia, Wash., and a new wind farm in Illinois that will power 360 stores in that state, including the future Chicago Roastery.
For the fourth year in a row, more than 99% of our coffee was verified as ethically sourced under C.A.F.E. Practices – that’s nearly 650 million pounds of it. Although we are constantly striving for 100%, it’s that last 1% where some of our most important work happens, bringing on new farmers and cooperatives to help ensure the long-term future of coffee
Starbucks has donated more than 31 million coffee trees over the past three years (9.4 million in 2018) to farmers in Mexico, Guatemala and El Salvador. These climate-resilient trees replace ones that are declining in productivity due to age and disease, such as coffee leaf rust. Our goal is to provide 100 million trees by 2025.
In 2018, loans reached thousands of farmers in 14 countries to strengthen their coffee farms through tree renovation and infrastructure improvements. Our goal is to invest $50 million in farmer loans by 2020.
Our expert agronomists have provided free training to 52,240 coffee farmers through our nine farmer support centers in coffee-producing countries around the world in the past two years, including 27,938 in 2018. We will explore new ways to further scale our efforts. Our goal is to train 200,000 coffee farmers by 2020.
Revenues
Starbucks uses Generally Accepted Accounting Principles (GAAP) to report our numbers. Starbucks reports $4.2 billion in revenues from three sources, divided worldwide into three segments: Americas, CAP (China, Asia Pacific) and EMEA (Europe, Middle East, Africa)
Revenue from company-operated stores accounted for 79% of total net revenues during fiscal 2018. Our retail objective is to be the leading retailer and brand of coffee and tea in each of our target markets by selling the finest quality coffee, tea and related products, as well as complementary food offerings, and by providing each customer with a unique Starbucks Experience. The Starbucks Experience is built upon superior customer service and a seamless digital experience as well as clean and well-maintained stores that reflect the personalities of the communities in which they operate, thereby building a high degree of customer loyalty.
Revenues from our licensed stores accounted for 11% of total net revenues in fiscal 2018. Licensed stores generally have a lower gross margin and a higher operating margin than company-operated stores. Under the licensed model, Starbucks receives a reduced share of the total store revenues, but this is more than offset by the reduction in our share of costs as these are primarily incurred by the licensee. In our licensed store operations, we leverage the expertise of our local partners and share our operating and store development experience. Licensees provide improved, and at times the only, access to desirable retail space. Most licensees are prominent retailers with in-depth market knowledge and access. As part of these arrangements, we sell coffee, tea, food and related products to licensees for resale to customers and receive royalties and license fees from the licensees. We also sell certain equipment, such as coffee brewers and espresso machines, to our licensees for use in their operations. Employees working in licensed retail locations are required to follow our detailed store operating procedures and attend training classes similar to those given to employees in company-operated stores. In a limited number of international markets, we also use traditional franchising and include these stores in the results of operations from our other licensed stores.
Other revenues primarily are recorded in our Channel Development segment and include sales of packaged coffee, tea and ready-to-drink beverages to customers outside of our company-operated and licensed stores. Historically revenues have included domestic and international sales of our packaged coffee, tea and ready-to-drink products to grocery, warehouse club and specialty retail stores and through institutional foodservice companies which serviced businesses. In the fourth quarter of fiscal 2018, we began licensing the rights to sell and market Starbucks-branded products in authorized channels to Nestlé. As a result, other revenues includes product sales to and licensing revenue from Nestlé under this arrangement and the amortization of the upfront prepaid royalty payment. Our collaborative business relationships for global ready-to-drink products and the associated revenues remain unchanged due to the Global Coffee Alliance with Nestlé.
Net revenues for the Americas segment grew 11% over 2018 to $4.7 billion in 2019, primarily driven by 7% growth in comparable store sales and 641 net new store openings, or 4% store growth, over the past 12 months, and the impact of the adoption of new revenue recognition accounting for SVC breakage. Operating income grew 18% to $1,067.1 million in 2019, up from $906.8 million in 2018. Operating margin of 22.8% expanded 130 basis points, primarily due to sales leverage and cost savings initiatives, partially offset by growth in wages and higher inventory reserves.
Net revenues for the China/Asia Pacific segment grew 9% over 2018 to $1.3 billion in 2019, primarily driven by 994 net new store openings, or 12% store growth, over the past 12 months, and a 5% increase in comparable store sales. The conversion of the Thailand retail business from company-operated to fully licensed occurred toward the end of 2019 and did not have a significant impact on revenue growth. 2019 operating income of $269.8 million grew 15% over 2018 operating income of $234.1 million. Operating margin expanded 120 basis points to 20.2%, primarily due to sales leverage and cost savings initiatives, partially offset by product mix and strategic investments.
Net revenues for the EMEA segment declined 11% from 2018 to $231.7 million in 2019 due to the conversion of our France and Netherlands retail businesses to fully licensed operations in 2019 and the closure of certain company-operated stores, partially offset by 286 net new store openings, or 9% store growth, over the past 12 months. Operating income of $16.6 million in 2019 declined 43% compared to $29.2 million in 2018. Operating margin declined 400 basis points to 7.2%, primarily due to higher restructuring costs associated with the closure of certain company-operated stores, partially offset by the shift in portfolio towards more licensed stores.
Consolidated total net revenues increased 10% to $24.7 billion, primarily driven by incremental revenues from 1,997 net new store openings over the past 12 months, incremental revenues from the impact of our ownership change in East China, 2% growth in global comparable store sales and favorable foreign currency translation.
We expect moderate revenue growth in fiscal 2019, reflecting implementation of our streamlining activities and driven by comparable store sales growth and the opening of approximately 2,100 net new stores globally.
Turning to fiscal 2019, we expect continued growth through thoughtful long-term investments that create value and reward shareholders. These results are expected to be driven by our three strategic priorities, which include:
• Accelerate growth in our targeted, long-term growth markets of the U.S. and China
• Expand the global reach of the Starbucks brand leveraging the Global Coffee Alliance
• Sharpen our focus on increasing shareholder returns
Our cash and investments were $9.2 billion and $3.2 billion as of September 30, 2018 and October 1, 2017, respectively with the increase driven primarily by the upfront payment associated with the Global Coffee Alliance. We actively manage our cash and investments in order to internally fund operating needs, make scheduled interest and principal payments on our borrowings, make acquisitions, and return cash to shareholders through common stock cash dividend payments and share repurchases. Our investment portfolio primarily includes highly liquid available-for-sale securities, including corporate debt securities, government treasury securities (domestic and foreign), mortgage and asset-backed securities, commercial paper, and agency obligations. As of September 30, 2018, approximately $1.3 billion of cash was held in foreign subsidiaries.
Our $2.0 billion unsecured 5-year revolving credit facility (the “2018 credit facility”) and our $1.0 billion unsecured 364Day credit facility (the “364-day credit facility”) are available for working capital, capital expenditures and other corporate purposes, including acquisitions and share repurchases.
The 2018 credit facility, of which $150 million may be used for issuances of letters of credit, is currently set to mature on October 25, 2022. We have the option, subject to negotiation and agreement with the related banks, to increase the maximum commitment amount by an additional $500 million. Borrowings under the credit facility will bear interest at a variable rate based on LIBOR, and, for U.S. dollar-denominated loans under certain circumstances, a Base Rate (as defined in the credit facility), in each case plus an applicable margin. The applicable margin is based on the better of (i) the Company's long-term credit ratings assigned by Moody's and Standard & Poor's rating agencies and (ii) the Company's fixed charge coverage ratio, pursuant to a pricing grid set forth in the five-year credit agreement. The current applicable margin is 0.680% for Eurocurrency Rate Loans and 0.00% (nil) for Base Rate Loans.
The 364-day credit facility, of which no amount may be used for issuances of letters of credit, was originally set to mature on October 25, 2018. In the first quarter of fiscal 2019, the maturity has been extended to October 23, 2019. We have the option, subject to negotiation and agreement with the related banks, to increase the maximum commitment amount by an additional $500 million. Borrowings under the credit facility will bear interest at a variable rate based on LIBOR, and, for U.S. dollar denominated loans under certain circumstances, a Base Rate (as defined in the credit facility), in each case plus an applicable margin. The applicable margin was increased from 0.585% to 0.92% for Eurocurrency Rate Loans and 0.00% (nil) for Base Rate Loans as a result of the extension. Both credit facilities contain provisions requiring us to maintain compliance with certain covenants, including a minimum fixed charge coverage ratio, which measures our ability to cover financing expenses. As of September 30, 2018, we followed all applicable credit facility covenants. No amounts were outstanding under our credit facility as of September 30, 2018. Under our commercial paper program, we may issue unsecured commercial paper notes up to a maximum aggregate amount outstanding at any time of $3 billion, with individual maturities that may vary but not exceed 397 days from the date of issue. Amounts outstanding under the commercial paper program are required to be backstopped by available commitments under our credit facilities discussed above. The proceeds from borrowings under our commercial paper program may be used for working capital needs, capital expenditures and other corporate purposes, including, but not limited to, business expansion, payment of cash dividends on our common stock and share repurchases.
As of September 30, 2018, we had no borrowings under our commercial paper program. In August 2018, we issued long-term debt in an underwritten registered public offering, which consisted of $1.25 billion of 7year 3.800% Senior Notes (the “2025 notes”) due August 2025, $750 million of 10-year 4.000% Senior Notes (the “2028 notes”) due November 2028 and $1 billion of 30-year 4.500% Senior Notes (the “2048 notes”) due November 2048. Interest on the 2025 notes is payable semi-annually on February 15 and August 15, commencing on February 15, 2019. Interest on the 2028 and 2048 notes is payable semi-annually on May 15 and November 15, commencing on November 15, 2018. In February 2018, we issued long-term debt in an underwritten registered public offering, which consisted of $1 billion of 5year 3.100% Senior Notes (the “2023 notes”) due March 2023 and $600 million of 10-year 3.500% Senior Notes (the “2028 notes”) due March 2028. Interest on the 2023 and 2028 notes is payable semi-annually on March 1 and September 1, commencing on September 1, 2018.
In November 2017, we issued long-term debt in an underwritten registered public offering, which consisted of $500 million of 3-year 2.200% Senior Notes (the “2020 notes”) due November 2020 and $500 million of 30-year 3.750% Senior Notes (the “2047 notes”) due December 2047. Interest on the 2020 notes is payable semi-annually on May 22 and November 22, commencing on May 22, 2018 and interest on the 2047 notes is payable semi-annually on June 1 and December 1, commencing on June 1, 2018. The net proceeds from these offerings are used for general corporate purposes, including repurchases of our common stock under our ongoing share repurchase program and payment of dividends.
We expect to use our available cash and investments, including, but not limited to, additional potential future borrowings under the credit facilities, commercial paper program and the issuance of debt, to invest in our core businesses, including capital expenditures, new product innovations, related marketing support and partner and digital investments, return cash to shareholders through common stock cash dividend payments and share repurchases, as well as other new business opportunities related to our core and other developing businesses. Further, we may use our available cash resources to make proportionate capital contributions to our investees. We may also seek strategic acquisitions to leverage existing capabilities and further build our business in support of our growth agenda. Acquisitions may include increasing our ownership interests in our investees. Any decisions to increase such ownership interests will be driven by valuation and fit with our ownership strategy. We believe that future cash flows generated from operations and existing cash and investments both domestically and internationally combined with our ability to leverage our balance sheet through the issuance of debt will be sufficient to finance capital requirements for our core businesses as well as any shareholder distributions for the foreseeable future.
Significant new joint ventures, acquisitions and/or other new business opportunities may require additional outside funding. We have borrowed funds and continue to believe we can do so at reasonable interest rates; however, additional borrowings would result in increased interest expense in the future. In this regard, we may incur additional debt, within targeted levels, as part of our plans to fund our capital programs, including cash returns to shareholders through dividends and share repurchases. We have historically considered most undistributed earnings of our foreign subsidiaries and equity investees to be indefinitely reinvested, and, accordingly, no foreign withholding taxes have been provided on such earnings.
We continue to evaluate our plans for reinvestment or repatriation of unremitted foreign earnings and thus have not adjusted our previous indefinite reinvestment assertions for the effects of the Tax Act. We have not, nor do we anticipate the need for, repatriated funds to the U.S. to satisfy domestic liquidity needs. However, the Tax Act requires a one-time transition tax for deemed repatriation of accumulated undistributed earnings of certain foreign investments. This one-time transition tax is payable over eight years, with most of the cash outlay expected to be made in the later years. In connection with our initial analysis, we have estimated a provisional amount of $262 million, of which $237 million of income taxes payable was included in other long-term liabilities on the consolidated balance sheet, as of September 30, 2018.
We regularly review our cash positions and our determination of permanent reinvestment of foreign earnings. In the event we determine that all or a portion of such foreign earnings are no longer indefinitely reinvested, we may be subject to additional foreign withholding taxes and U.S. state income taxes, beyond the Tax Act's one-time transition tax, which could be material.
During each of the first three quarters of fiscal 2017, we declared a cash dividend to shareholders of $0.25 per share. In the fourth quarter of fiscal 2017 and each of the first two quarters of fiscal 2018, we declared a cash dividend of $0.30 per share, and we declared $0.36 per share in the last two quarters of fiscal 2018. Dividends are paid in the quarter following the declaration date. Cash returned to shareholders through dividends in fiscal 2018 and 2017 totaled $1.7 billion and $1.5 billion, respectively. In the fourth quarter of fiscal 2018, we declared a cash dividend of $0.36 per share to be paid on November 30, 2018 with an expected payout of approximately $445 million. During fiscal years 2018 and 2017, we repurchased 131.5 million and 37.5 million shares of common stock, respectively, or $7.2 billion and $2.1 billion, respectively, under our ongoing share repurchase program. In early fiscal 2019, we commenced the repurchase of $5.0 billion of our common stock under accelerated share repurchase agreements. Other than normal operating expenses, cash requirements for fiscal 2019 are expected to consist primarily of capital expenditures for investments in our new and existing stores, our developing Siren Retail business and our supply chain and corporate facilities. Total capital expenditures for fiscal 2019 are expected to be approximately $2 billion.
Cash provided by operating activities was $11.9 billion for fiscal 2018, compared to $4.3 billion for fiscal 2017. The change was primarily due to receipt of the upfront payment from Nestlé in the fourth quarter of fiscal 2018. Cash used by investing activities totaled $2.4 billion for fiscal 2018, compared to $0.9 billion for fiscal 2017. The change was primarily due to cash used to acquire the 50% ownership interest in our East China joint venture in the first quarter of fiscal 2018 and additions to property, plant and equipment driven by new store openings and increased store renovations, partially offset by the net proceeds from the divestiture of certain operations. Cash used by financing activities for fiscal 2018 totaled $3.2 billion, compared to $3.1 billion for fiscal 2017. The change was primarily due to an increase in cash returned to shareholders through share repurchases and dividend payments, partially offset by higher proceeds from the issuance of long-term debt.
We purchase, roast and sell high-quality whole bean arabica coffee beans and related coffee products. The price of coffee is subject to significant volatility. We purchase commodity inputs, primarily coffee, dairy products, diesel, cocoa, sugar and other commodities, that are used in our operations and are subject to price fluctuations that impact our financial results. We use a combination of pricing features embedded within supply contracts, such as fixed-price and price-to-be-fixed contracts for coffee purchases, and financial derivatives to manage our commodity price risk exposure. We frequently enter into supply contracts whereby the quality, quantity, delivery period, and other negotiated terms are agreed upon, but the date, and therefore price, at which the base coffee commodity price component will be fixed has not yet been established. These are known as price-to-be-fixed contracts.
Market risk is defined as the risk of losses due to changes in commodity prices, foreign currency exchange rates, equity security prices and interest rates. We manage our exposure to various market-based risks according to a market price risk management policy. Under this policy, market-based risks are quantified and evaluated for potential mitigation strategies, such as entering into hedging transactions. The market price risk management policy governs how hedging instruments may be used to mitigate risk. Risk limits are set annually and prohibit speculative trading activity. We also monitor and limit the amount of associated counterparty credit risk, which we consider to be low. Excluding interest rate swaps, hedging instruments generally do not have maturities in excess of three years.
To reduce cash flow volatility from foreign currency fluctuations, we enter into derivative instruments to hedge portions of cash flows of anticipated intercompany royalty payments, inventory purchases, intercompany borrowing and lending activities and certain other transactions in currencies other than the functional currency of the entity that enters into the arrangements, as well as the translation risk of certain balance sheet items.
Much of our future success depends on the continued availability and service of senior management personnel. The loss of any of our executive officers or other key senior management personnel could harm our business. We must continue to recruit, retain and motivate management and other employees sufficiently, both to maintain our current business and to execute our strategic initiatives, some of which involve ongoing expansion in business channels outside of our traditional company operated store model.
In response to an incident at a Starbucks location in Philadelphia, all Starbucks company-owned retail stores and corporate offices closed on the afternoon of Tuesday, May 29 (more than 8,000 company-owned stores in the United States) to conduct racial-bias education geared toward preventing discrimination in our stores. The training was provided to nearly 175,000 partners (employees) across the country and will become part of the onboarding process for new partners. During that time, partners will go through a training program designed to address implicit bias, promote conscious inclusion, prevent discrimination and ensure everyone inside a Starbucks store feels safe and welcome.