Expense Forecast

I: Cost of Sale:

Cost of Commodity:

* Coffee bean price: Starbucks purchase, roasts, and sell high-quality whole bean Arabica coffee beans and related coffee products. The price of these coffee beans is traded on a negotiable basis at a premium, which is determined by the supply and demand of the market. In addition, due to the different factors in the producing countries, Starbucks have problem entering into fixed - price contract with its suppliers. Based on the aggressive expansion plan of Starbucks, we assume the coffee consumption will increase over the years; therefore, the price of high-quality Arabica coffee beans will increase too.

Also, in general, because Starbucks imports its coffee beans globally from different coffee plantation, the coffee bean expense will be affected by the crude oil price. As the price of crude oil increases, costs related to securing and distributing coffee beans also rises. Due to this trend, high crude oil prices will likely increase the cost for coffee retailers to sell coffee for on-site consumption or stock coffee on their retail shelves. In 2015, the world price of crude oil is expected to decrease, however, crude oil prices are anticipated to remain volatile.

* Diary

Cost of new store leasing (Rental/Occupancy costs):

* Starbucks plan to open more stores in the Asian market, especially in Japan and China due dynamic growth in coffee consumption at an average 4% rate. Also, Starbucks plans to enter into new market such as Colombia. Therefore, we assume Starbucks will have continued growing rental expenses. Depend on the type of lease agreement; assume Starbucks signs more capital lease, the depreciation expense will increase too.

II . Store-operating expenses:

Cost of marketing and advertisement:

When Starbucks enter into new market such as Colombia, Bolivia, and Panama, it will need to promote the brand. Therefore, we assume the marketing and advertising costs will continue to grow.

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