Regardless of the Covid-19, life in Minnesota appears to be taking the normal routines where businesses are allowed to accept both dine-in and delivery services. With this freedom, I took a bold step to visit the Seattle-based giant coffee shop, Starbucks, located in Hopkins, Minnesota. I made the appearance on a Saturday mid-morning. As expected, the coffee store was almost full with most of the people busy with their work. It was a perfect place for anyone to take their break and work from there. The staff were fast and were very friendly. Thanks to the staff who provided me a reserved seat near the counter to observe the operations more keenly.
When the cashier makes a sale to a customer in Starbucks, there various accounts in the financial statements that are affected. First, the first impacted accounts are the sales revenue account, cash account, and inventory. The sales revenue accounts increase due to the amounts paid by the clients for the coffee or soft bites offered. While there are options for making a payment in Starbucks like credit/debit cards or through the Starbucks app, cash remains to be the most solid form of payment. Therefore, most of the sales could be recorded under a cash or bank account for online payments. Once coffees are sold, the inventory decreases. The adjustments and overall postings for the sale of Starbucks’s coffee are done on the income statement under sales revenue and cost of goods sold.
While assessing the Starbucks store risk, I can attest that it is not easy for baristas to make coffee over the counter without paying. First, the security system is very tight such that only the customer who has paid is allowed to proceed for the services side to pick up their order. That means that without a payment receipt there is no way one can have their favorite cup of coffee. In addition, Starbucks relies on an integrated system of computers to keep track of inventory at the sales point registers (Azriuddin et al., pp.33-43). Meaning unless the cashier wishes to buy or promote a client, one cannot get served without paying for the product as the balance between the sales made and the inventory balance would not reconcile.
In Starbucks, employees can take coffee without paying. In fact, they do it with the permission of the management of the store. Employees are awarded a coupon that they can redeem into coffee or bites within the premises (Clark). That means that the chain store accounts for all the coffees taken by their staff. In a case where an employee takes coffee without the issued voucher or coupon, this could turn into a loss. It could affect the inventory, cost of goods sold, and sales revenue accounts by creating a deficit in each. That is why the company avoids this theft by ensuring that it pays for all consumed coffee to avoid unreconciled financial statements.
Overall, the visit was worth learning. The experience was stunning. I liked the cleanliness and how the staff and service delivery seemed to be organized; it is no surprise why the Coffee giant makes no losses. I would not mind visiting the store again, but this time for a coffee.
Azriuddin, Muhammad, et al. “Becoming an international brand: A case study of Starbucks.” Journal of the Community Development in Asia (JCDA) 3.1 (2020): 33-43.
Clark, Melissa Lauren. “Viewing Starbucks Through the Four Frames.” (2021).