The Staggering Amount Of Unspent Money Left On Starbucks Gift Cards

Starbucks got its start in 1971 and never looked back. Now there are over 21,000 locations around the world. Many people love the coffee chain so much that they know everything from how Starbucks got its name to the most expensive drink on the menu. What people don't know is that Starbucks doesn't just profit off selling you coffee, it also profits from selling you the idea of coffee. Starbucks reported that in Q3 of 2022, there was 1.77 billion dollars left unredeemed on gift cards. The company also reported a breakage revenue of 196.1 million dollars for company-operated stores and 18.9 million dollars in licensed-store revenue.

With the company's evolution in the Starbucks app, many of these balances are completely digital, so the coffee giant doesn't even print out a physical gift card, thus saving even more money and making more in profit — sometimes without actually selling any coffee.

Starbucks incentivizes its customer base to preload funds onto the app by dangling rewards in front of them. Sure, you could pay with a debit or credit card, ynou could even use cash and simply have the app scanned at checkout, but you'll only get one gold star per dollar spent for doing so. If you preload money onto the Starbucks app and use that balance toward ordering your drink, you'll get two gold stars per dollar spent.

The Starbucks app operates on a model similar to that of a bank. Banks allow people and businesses to store money which the bank then pays them interest on. Banks pay you for storing money with them because it allows them to use the money placed in accounts for other purposes. Starbucks doesn't pay interest on the money stored on its app, but the company can still use that money before you redeem it (if you ever bother to redeem it at all). Unused funds make up about 10% of all of the money in the "Bank of Starbucks." This 10% is still considered revenue for the company. The amount of money flowing through the Starbucks app at any given time is more than some banks.

So when you load money onto the Starbucks app or buy someone a cute plastic gift card, Starbucks keeps all of that money, whether you get a coffee or not. If the drink you order is 10 cents less than the dollar amount you load on the card, Starbucks gets an additional ten cents of revenue for absolutely nothing. This small amount adds up quickly amongst their vast customer base and is a subtle way of charging customers more. Some customers still use other forms of payment, but to be a better Starbucks customer and get more gold stars, you're incentivized to load that balance.