Ben Gilbert: belief

Transcript context

…There was a time 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. 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’s life, you build a new store and the profits from that store would totally cover the costs 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. I was in it in so many ways. But the economic model and Wall Street, when we went public in 1992, when they heard the model, I said, well, we’ve never seen a model like that. The model basically was a sales to investment ratio of 2:1 and an operating profit of 20%.…

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