Starbucks Fiscal 2022 Annual Report

FISCAL 2022 ANNUAL REPORT

In everything we do, we are always dedicated to our mission: TO INSPIRE AND NURTURE THE HUMAN SPIRIT – ONE PERSON, ONE CUP, AND ONE NEIGHBORHOOD AT A TIME.

Making it Count OUR YEAR AT A GLANCE

$32.3 BILLION

Our total net revenue increased to $32.3 billion in 2022

$4.6 BILLION

Our operating income was $4.6 billion in 2022

$2.83

Our diluted earnings per share lied at $2.83 in 2022

$1.8 BILLION

Our capital expenditures were $1.8 billion in 2022

$6.3 BILLION

We returned $6.3 billion to our shareholders in 2022

35,711

We had 35,711 total stores in 2022

Reflecting on 2022 A WORD FROM OUR CEO

To Our Shareholders,

Over the years and throughout our years of joint service on the board, we have returned often to the origin story of 1912 Pike Place, our first and still-beloved storefront in the heart of Seattle. When you step inside the front doors of this tiny space, you are transported into another world. This is a place where on either side of the well-worn wood counters, visitors and baristas converse like old friends and celebrate the craft and care that goes into every cup of Starbucks coffee. There is an enduring energy and spirit in the air that inspires us and reminds us of the extraordinary journey Starbucks has traveled over five decades. We’ve grown from just four stores to nearly 36,000; from serving a few hundred customers a day to now more than 100 million customer occasions daily around the world. At the heart of it all is the Starbucks secret sauce – our people and their ability to create magic through coffee and connection.

REINVENTION

Last summer, we set off in a new direction. Together with our partners, we have co-created a Reinvention plan that touches every aspect of the Starbucks Experience. For our customers, we are using technology to make their visits to our stores personalized and effortless, while also freeing up store partners to focus on creating more moments of connection. We are meeting them where they are, whether that’s a Cold Brew on the go from a Pick-Up store, a quiet moment with a cappuccino inside one of our cafés, or a deep dive into coffee education with a workshop at our new Starbucks Reserve location at the Empire State Building. For our partners, we are equipping them with better tools and training and have committed more than $1 billion in partner and store experience investments. We are bringing coffee excellence, coffee craft, and joy and a little bit of love back into being a Starbucks barista. Over the past year, we have seen that the demand for Starbucks is greater than ever. In fiscal 2022, global revenues grew 13 percent over the prior year to a record $32.3 billion, driven by phenomenal 8 percent global growth in comparable store sales. Starbucks International continues to drive growth for the company, and we expect two-thirds of global retail growth over the next three years to come from our international business. As we continue to navigate the COVID pandemic and its impacts in China, we are focused on supporting our partners and leaders in the market and look forward to a bright future ahead. Our impact at Starbucks ripples on a global scale. We take this responsibility seriously and strive to make a

Howard Schultz, Chief Executive Officer Mellody Hobson, Independent Chair

positive difference in the lives of the people we serve and the planet we share. We believe that every partner and every customer should have a sense of belonging at Starbucks and should be able to be their authentic selves every day. We are dedicated to advancing racial and social equity, and we are committed to furthering that work with intention, transparency, and accountability. We are striving to be a resource-positive company, to give back more of the planet’s resources than we consume. To help us get there, we have clear and ambitious sustainability targets to reduce our carbon, water, and waste footprints in half by 2030. Additionally, we are integrating sustainability throughout our Reinvention efforts, working to ensure we are considering the impacts to sustainability with each one of our strategies.

ONWARD

The new fiscal year also marks a new chapter with incoming CEO, Laxman Narasimhan. Since joining the company in October, he has been traveling around the world and immersing in our company and culture. Each day we have together, including time in Origin with our extended leadership team this Fall in Hacienda Alcasia, Costa Rica, we are reminded he is an extraordinary global citizen and servant leader who is embracing the vision of Starbucks in his own way. We are both so proud of the company Starbucks is today and will be tomorrow, and profoundly grateful to the more than 400,000 Starbucks partners who are a part of this great odyssey. We would also like to extend our appreciation to the Starbucks Board of Directors for their leadership and support during this time of reinvention and renewal. We are laying the foundation for the future of a Starbucks even more true to our shared mission: To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.

With respect and gratitude,

Our Company and Our Heritage ABOUT US

Our story begins in 1971 along the cobblestone streets of Seattle’s historic Pike Place Market. It was here where Starbucks opened its first store, offering fresh-roasted coffee beans, tea and spices from around the world for our customers to take home. Our name was inspired by the classic tale, “Moby-Dick,” evoking the seafaring tradition of the early coffee traders.

Ten years later, a young New Yorker named Howard Schultz would walk through these doors and become captivated with Starbucks coffee from his first sip. After joining the company in 1982, a different cobblestone road would lead him to another discovery. It was on a trip to Milan in 1983 that Howard first experienced Italy’s coffeehouses, and he returned to Seattle inspired to bring the warmth and artistry of its coffee culture to Starbucks. By 1987, we swapped our brown aprons for green and embarked on our next chapter as a coffeehouse.

Starbucks would soon expand to Chicago and Vancouver, Canada and then on to California, Washington, D.C. and New York. By 1996, we would cross the Pacific to open our first store in Japan, followed by Europe in 1998 and China in 1999. Over the next two decades, we would grow to welcome millions of customers each week and become a part of the fabric of tens of thousands of neighborhoods all around the world.

It takes many hands to craft the perfect cup of coffee – from the farmers who tend to the red-ripe coffee cherries, to the master roasters who coax the best from every bean, and to the barista who serves it with care. We are committed to the highest standards of quality and service, embracing our heritage while innovating to create new experiences to savor.

35,711

17,295

18,416

Total number of stores Stores in North America Stores internationally

60% of the stores in North America are company-operated

40% of the stores in North America are licensed

From Local to Global FIND US ON THE MAP

We generate the majority of our revenues through licensed stores and company-operated store. Starbucks company-operated stores are typically located in high-traffic, high-visibility locations. Our ability to vary the size and format of our stores allows us to locate them in or near a variety of settings, including downtown and suburban retail centers, office buildings, university campuses and rural and off-highway locations. We are continuing the expansion of our stores, particularly drive-thru formats that provide a higher degree of access and convenience, and alternative store formats, which are designed to provide a more streamlined customer experience in dense metropolitan areas.

44% of the stores nationally are licensed

56% of the stores nationally are company-operated

From the Raw Materials to the Finished Product SUPPLY AND COMPETITION

PRODUCT SUPPLY

Starbucks is committed to selling the finest whole bean coffees and coffee beverages. To help ensure compliance with our rigorous coffee standards, we generally control substantially all coffee purchasing, roasting and packaging and the global distribution of coffee used in our operations. Nestlé controls distribution of certain finished goods through the Global Coffee Alliance. 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 buy coffee using fixed-price and price-tobe-fixed purchase commitments, depending on market conditions, to secure an adequate supply of quality green coffee. We also utilize forward contracts, futures contracts and collars to hedge “C” price exposure under our priceto-be-fixed green coffee contracts and our long-term forecasted coffee demand where underlying fixed-price and price-to-be-fixed contracts are not yet available. Total purchase commitments, together with existing inventory, are expected to provide an adequate supply of green coffee through fiscal 2023.

We depend on 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 ten farmer support centers, including our China Farmer Support Center located in the Yunnan Province. These farmer support centers are staffed with sustainability experts who work with coffee farming communities to promote best practices in coffee production designed to improve both coffee quality and yields and agronomy support to address climate change and other impacts.

In addition to coffee, we also purchase significant amounts of dairy and plant-based dairy-free alternative products, particularly fluid milk, oat milk and almond milk to support the needs of our company-operated stores. We believe, based on relationships established with our dairy and plantbased suppliers, that the risk of non-delivery of sufficient fluid milk and plantbased alternatives to support our stores generally 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 are also expanding our use of reusable packaging to reduce landfill waste. We believe, based on relationships established with these suppliers and manufacturers, that the risk of non-delivery of these items generally is remote.

During fiscal 2021 and continuing into fiscal 2022, we experienced certain supply shortages and transportation delays largely attributable to impacts of the COVID-19 pandemic as well as changes in customer demand and behaviors. While we expect these shortages and delays may continue into fiscal 2023, we view them to be temporary and do not believe they will have a material impact to our long-term growth and profitability.

COMPETITION

Our primary competitors for coffee beverage sales are specialty coffee retailers and shops. We believe that our customers choose among specialty coffee retailers and shops primarily on the basis of product quality, brand reputation, service and convenience, as well as price. We continue to experience direct competition from large competitors in the quick-service restaurant sector and the ready-to-drink coffee beverage market, in addition to both well-established and start-up 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 food service accounts and compete indirectly against all other coffees and teas on the market.

Current and Total Assets

BALANCE SHEET

In millions, except per share data, for the Starbucks Corporation For the fiscal year ended October 2, 2022

CURRENT ASSETS:

Cash and cash equivalents

Short-term investments

Accounts receivable, net

Inventories

Prepaid expenses and other current assets

TOTAL CURRENT ASSETS:

Other investments

Other assets

Deferred income taxes

Goodwill

TOTAL ASSETS:

CONSOLIDATED BALANCE SHEET FOR 2022 Displays the total assets composed of current assets, goodwill, and other investments

$8,725.7 Other assets

$7,150.8 Other investments

$1,799.7 Deferred income taxes

$7,018.7 Total current assets

$3,283.5 Goodwill

Return to Shareholders PERFORMANCE COMPARISON

The following graph depicts the total return to shareholders from October 1, 2017, through October 2, 2022 for the Starbucks Corporation, relative to the performance of the Starbucks Corporation. All indices shown in the graph have been reset to a base of 100 as of October 1, 2017, and assume an investment of $100 on that date and the reinvestment of dividends paid since that date. The stock price performance shown in the graph is not necessarily indicative of future price performance.

MARKET INFORMATION

Starbucks common stock is traded on NASDAQ, under the symbol “SBUX.” As of November 11, 2022, we had approximately 18,000 shareholders of record. This does not include persons whose stock is in nominee or “street name” accounts through brokers. Future decisions to pay comparable cash dividends continue to be at the discretion of the Board and will be dependent on our operating performance, financial condition, capital expenditure requirements and other factors that the Board considers relevant.

$173.61 lies as the stock price performance for fiscal 2022

$3,655.5 Licensed stores

$2,018.7 Other

$26,576.1 Company-operated stores

CONSOLIDATED RESULTS OF OPERATIONS FOR 2022

Displays the total net revenues for company-operated stores, licensed stores, and other in millions

Revenue Breakdown

RESULTS OF OPERATIONS

Starbucks results for fiscal 2022 demonstrate the resiliency and strength of our brand. Consolidated revenues increased 11% to $32.3 billion in fiscal 2022 compared to $29.1 billion in fiscal 2021, primarily driven by strength in our U.S. business and growth in our International segment excluding China, partially offset by the impact of the extra week in fiscal 2021 ($496 million) and unfavorable foreign currency translation.

Moving Forward OUR OUTLOOK FOR THE FUTURE

We believe we have built an excellent reputation globally for the quality of our products, for delivery of a consistently positive consumer experience and for our global social and environmental impact programs. The Starbucks brand is recognized throughout most of the world, and we have received high ratings in global brand value studies. To be successful in the future, particularly outside of the U.S. where the Starbucks brand and our other brands are less well-known, we believe we must preserve, grow and leverage the value of our brands across all sales channels. Brand value is based in part on consumer perceptions on a variety of subjective qualities.

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 our key management personnel could harm our business. Our success also depends substantially on the contributions of our retail store employees whom we rely on to give customers a superior experience and elevate our brand. Accordingly, our performance depends on our ability to recruit and retain high-quality management personnel and other employees to work in and manage our stores. Our ability to attract and retain corporate, retail and other 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. In addition to this, there is intense competition for qualified technology systems developers necessary to develop and implement new technologies for our growth initiatives. If we are unable to recruit, retain and motivate employees sufficiently to maintain our business and support our projected growth, our business and financial performance may be affected.

We believe that net future cash flows 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 shareholder distributions for at least the next 12 months. We are currently not aware of any trends or demands, events,

or uncertainties that will result in our liquidity increasing or decreasing in any material way that will impact our capital needs during or beyond the next 12 months.

In fiscal 2022, we announced our plan in the U.S. market to increase our efficiency while elevating the partner and customer experience (“Reinvention Plan”). We believe our investments will increase retention and productivity while the acceleration of purpose-built store concepts and technology will provide additional connection and convenience with our customers. As a result of the restructuring efforts in connection with the Reinvention Plan, we recorded $46.0 million to restructuring and impairments on our consolidated statements of earnings. Future restructuring and impairment costs attributable to our Reinvention Plan are not expected to be material.

Expanding on Success GROWTH BUILT ON OUR BRAND YOUR PERSONALITY. OUR HERITAGE. THE PERFECT BLEND.

Starbucks is the premier roaster, marketer and retailer of specialty coffee in the world, operating in 83 markets. Our primary objective is to maintain Starbucks standing as one of the most recognized and respected brands in the world. We believe the continuous investments in our brand and operations will deliver long-term targeted revenue and income growth. This includes expansion of our global store base, adding stores in both existing, developed markets such as the U.S. and in 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 experiences gained through our stores and elsewhere, we continue to drive beverage, equipment, process and technology innovation, including in our industry-leading digital platform. We strive to regularly offer consumers new, innovative coffee and other products in a variety of forms, across new categories, diverse channels and alternative store formats. Starbucks has always been a different kind of company – one deep with purpose, where we work together to create a positive impact in the world. With coffee at our core, we pursue ambitious goals for our partners (employees), our communities and our planet because we believe it is our role and responsibility to create a thriving business powered by thriving people for a thriving planet and communities. Starbucks work to uplift one another extends well beyond our partners to the communities where we do business around the world. We are committed to responsible and ethical sourcing led by Coffee and Farmer Equity (C.A.F.E.) Practices, the company’s third-party verification program and the cornerstone of our approach to ethical sourcing coffee, as well as a more sustainable, resilient future for our planet and for our communities.

CORPORATE INFORMATION

BOARD OF DIRECTORS

Mellody Hobson, Independent Chair of the Board

Richard E. Alllison, Jr.

Andrew Campion

Isabel Ge Mahe

Jørgen Vig Knudstorp

Satya Nadella

Joshua Cooper Ramo

Howard Schultz

Clara Shih

EXECUTIVE OFFICERS

Howard Schultz, Interim Cheif Executive Officer

Laxman Narasimhan, Chief Executive Officer - Elect

Michael Conway, Group President, International and Channel Development

Zabrina Jenkins, Acting Executive Vice President and General Counsel

Rachel Ruggeri, Executive Vice President and Chief Financial Officer

CORPORATE HEAD OFFICE

Starbucks Headquarters 2401 Utah Ave. S., S-CR1 Seattle, WA 98134

starbucks.com

1-206-447-1575