How StarBucks is secretly the WORST.

Everyone knows Starbucks. The world’s largest coffee chain The place where one gets their caffeine fix of a triple venti, almond milk, and two pumps of vanilla latte

Every time I order from Starbucks, I pay using my electronic gift card that I won once in a raffle for a lovely single or double shot of espresso with beans sourced from one of its many fair trade places.

But here’s the smacker(pun intended):

Starbucks has about $1.6 billion in outstanding gift card balances. That information comes courtesy of its annual 10-K filing with the SEC.

So what does this mean for you, the user? This means Starbucks is holding your money, basically getting a $1.6 billion loan for free without paying any interest rate whatsoever, and they ‘pay’ that loan in coffee.

Just when you think it does not get any better for Starbucks, many customers do not even use their balance, which means Starbucks does not even have to pay the entire amount!

In the fiscal year of 2022, Starbucks reported $196 million in brokerage (unused gift card balances).

Just to recap, it pays $0.00 in interest, keeps about 10% of that $1.6 billion, and there is no added incentive for users to have account balances other than having a membership point with every $1 spent.

I know some of you must be wondering how the heck Starbucks has so many users paying using its app rather than their credit card or other means of payment.

It's an ingenious flywheel effect:

From a product perspective, it is to:

1. Incentivize the user with its reward programmes, maximising interactivity.

2. Feeds that user data into an algorithm, personalising the app to the user in real time.

3. Allows orders to be queued up from several different channels, including third-party apps.

For the user, they get to start their order from anywhere, decide how they want it to be made, and even choose whether to pick it up or have it delivered.

So what do you think? Is Starbucks just a regular coffee chain, or is it secretly the worst bank?

Let me know in the comments below: