SBUXStarbucks

We note that you provided more expansive disclosure in your CSR report than you provided in your SEC filings. Please advise us what consideration you gave to providing the same type of climate-related disclosure in your SEC filings as you provided in your CSR report.

We advise the Staff that we regularly evaluate climate-related topics and trends, including those in our GESIR and other public statements, to identify those that may be either quantitatively or qualitatively material for inclusion in our SEC filings. Given the size of our consolidated financial results, the quantitative threshold is quite high.

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When we evaluated our climate-related items from our Global Social Impact report from fiscal 2019 and items that occurred during the fiscal years included in our FY20 Form 10-K, we concluded that they did not meet the threshold for inclusion into our FY20 Form 10-K. As an example, we reviewed our investments in renewable energy sources, which are highlighted in our Global Social Impact report. Collectively, they are not quantitatively material to our consolidated operations because they mainly replace other forms of energy that Starbucks would have otherwise obtained or are not wholly incremental to our financial results. We also evaluated trends specific to Starbucks that could have material impacts to our future financial results and incorporated those elements into our Risk Factors, which are summarized in our response to

Question 2 below. Further, we also assessed the qualitative importance of climate-related material within that report and did not identify any topics and trends that were material enough to warrant inclusion in our FY20 Form 10-K, outside of disclosures previously provided.

Our historical practice in our SEC filings has been to direct our financial statement users to the social impact section of our corporate website, which provides a comprehensive overview of our Global Social Impact strategy and commitments. We are mindful of heightened consumer and investor awareness of climate change and the evolving regulatory landscape (including anticipated new regulations from the SEC and other rule-making bodies), both of which will influence what information is included in our Form 10-K for the fiscal year ended October 3, 2021 (“FY21 Form 10-K”) and future filings. For those reasons, we currently expect to incorporate more information into our FY21 Form 10-K from our other external disclosures, including climate-related items.

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To the extent material, discuss the indirect consequences of climate-related regulation or business trends, such as the following: • decreased demand for goods or services that produce significant greenhouse gas emissions or are related to carbon-based energy sources; • increased competition to develop innovative new products that result in lower emissions; and • any anticipated reputational risks resulting from

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your operations or those of the business partners in your supply chain related to material greenhouse gas emissions.

We advise the Staff that, to date, we have not experienced any material trends in decreased demand for goods and services or increased competition or regulations as a result of greenhouse gas emissions. As an example, our expansion of plant-based menu items, including non-dairy alternatives, over the years but particularly in certain markets in fiscal 2021, has been primarily in response to customer requests as well as our desire to provide high-quality products that have the benefit of reducing our impact on the environment.

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For our customers, their requests may not be solely due to concerns over greenhouse gas emissions or carbon-based energy sources; they are likely based on a variety of reasons, such as dietary restrictions, lifestyle and wellness, animal rights concerns, taste preferences and others. We have been offering non-dairy alternatives since 1997 with the introduction of soy milk. Coconut milk and almond milk were introduced in 2015 and 2016, respectively, and in 2021 we have made oat milk available nationally in our U.S.

retail stores. Although we have made more plant-based products available in our retail stores for beverage and food options, they represented much less than 10% of our consolidated net revenues for each of the years ended September 27, 2020 and

October 3, 2021. Should circumstances change, we would disclose expected material trends within our SEC filings.

Additionally, our FY20 Form 10-K addressed material risks directly and indirectly related to climate change, specifically identifying potential regulatory changes and potential supply chain impacts as well as reputational risks that may affect our brand (abbreviated from Risk Factors):

Government and Regulatory Changes—Failure to comply with applicable laws and changing legal and regulatory requirements could harm our business and financial results. This includes changes in applicable environmental regulations, including increased or additional regulations to limit carbon dioxide and other greenhouse gas emissions, to discourage the use of plastic or to limit or impose additional costs on commercial water use, which may result in increased compliance costs, capital expenditures, incremental investments and other financial obligations for us and our business partners, which could affect our profitability.

Supply Chain—The supply and price of coffee we purchase can be affected by multiple factors in the producing countries, such as weather, including the potential of climate change. Because of the significance of coffee to our operations, increases in cost or shortages in availability of high-quality arabica coffee beans could have a material adverse impact on our profitability.

Brand Relevance and Brand Execution—Our success depends substantially on the value of our brands and failure to preserve their value could have a negative impact on our financial results. 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 impact programs. If we fail to comply with laws and regulations, publicly take controversial positions or actions or fail to deliver a consistently positive experience in each of our markets, our brand may be diminished. Additionally, consumer demand for our products and our brand equity could diminish significantly if we, our employees, licensees or other business partners fail to act or are perceived to act in an unethical, illegal or socially irresponsible manner.

Each quarter, we evaluate our business operations, external disclosures, trends and other factors to determine if there are material updates required for our Risk Factors. Our financial reporting process did not identify any need to update climate or greenhouse gas emission issues in any of our other risk factors prior to the filing of our FY20

Form 10-K.

We are currently updating our Risk Factors for our FY21 Form

10-K filing and expect to expand or modify several risks given a few factors occurring during our fiscal fourth quarter ended October 3, 2021, such as heightened stakeholder awareness of environmental-, socialand governance-related issues.

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If material, discuss the significant physical effects of climate change on your operations and results, including the quantification of material weather-related damages to your property or operations and any weather-related impacts on the cost or availability of insurance.

We advise the Staff that, in part because of our geographic diversity through operating in over 80 international markets, inclusive of where we source our products and where our company-operated and licensed stores are located, the physical effects of climate change and resulting financial impacts to Starbucks have not been quantitatively material.

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To date, we have not experienced any material change to the cost or availability of insurance regarding these issues.

While the physical effects of climate change and resulting financial impacts to Starbucks have not been material to date, we have noted and will continue to note drivers of material lost sales and asset impairment costs in our Management’s Discussion and Analysis of Financial Condition and Results of Operations within our SEC filings. We have also disclosed our significant accounting policies with respect to insurance reserves in the Notes to Consolidated Financial Statements within our FY20 Form 10-K. We will continue to re-evaluate these disclosures as circumstances evolve.

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Disclose any material litigation risks related to climate change and the potential impact to the company.

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Quantify any material increase in compliance costs related to climate change.

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We note your response to comment 2. Please describe in greater detail the indirect consequences that you considered in determining whether (1) there is increased competition to develop new products that result in lower emissions and (2) there are anticipated reputational risks resulting from your business partners in your supply chain related to greenhouse gas emissions.

We advise the Staff that part of the Starbucks strategy to grow its brand and business is to continue developing innovative beverage and food products that will resonate with our customers by adapting to their ever-changing behaviors, tastes and preferences. Starbucks aspires to provide high-quality products, a growing number of which may reduce our impacts on the environment, including lowering levels of greenhouse gas emissions or reducing our use of carbon-based energy sources and water.

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However, decisions to develop and launch new products that may have benefits for the environment, especially at a scale that would support our national and global operations, depend on many factors including customer demand trends, complexity of preparation, performance of past offerings and cost, availability and sustainability of ingredients. We expect to continue to enhance, update and diversify our product portfolios in order to support our profitand planet-positive work and anticipate other market players will continue to introduce products that will also compete in this space. We believe our ability to respond to changing customer behaviors and preferences through product, equipment, process and technology innovation will allow us to remain a strong competitor. While the increased demand and interest in plant-based ingredients may pose challenges in terms of availability and possibly cost, we believe we have built long-standing relationships with many suppliers, and our sourcing function continues to identify reliable providers of raw materials and ingredients. Furthermore, by varying our product ingredients, we reduce the risk of relying on a single source of ingredients, of which shortages in the marketplace may have a significant adverse impact to our results. Our FY20 Form 10-K and our Form 10-K for the fiscal year ended October 3, 2021 (“FY21 Form 10-K”) risk factors described the possible adverse impacts to our financial results of intense competition and our ability to respond to changing consumer demands (page 17 of the FY20 Form 10-K and page 20 of the FY21 Form 10-K). Through our risk assessment and disclosure controls processes, we have not identified any additional material risks specifically related to greenhouse gas emissions.

As mentioned in our original response, Starbucks strives to be a different kind of company. We care about the betterment of people and the planet, which we believe is important to creating long-term value for our shareholders, benefiting our stakeholders and contributing to our primary business objective. We continuously challenge ourselves to do better and use our scale for good to contribute thoughtfully to our peopleand planet-positive initiatives, such as reducing waste and water usage, promoting use of reusable cups and continuing to seek alternatives to single-use packaging, all of which may have indirect or secondary benefits of also reducing greenhouse gas emissions. Starbucks recognizes that we are in a very competitive marketplace and the business environment continues to evolve. We believe these risks were addressed in the risk factors section of both our FY20 Form 10-K and FY21 Form 10-K, specifically on risks related to competition (page 17 of the FY20 Form 10-K and page 20 of the FY21 Form 10-K) and risks related to evolving consumer preferences and tastes within the brand relevance and execution sub-section (page 13 of the FY20 Form 10-K and page 15 of the FY21 Form 10-K).

As a global company, Starbucks strives to work with supply chain business partners and other service providers (“suppliers”) that are committed to operating their business in a responsible and ethical manner, respecting rights of individuals and helping to protect the environment. We are exposed to direct brand reputation risk related to the business we conduct with our suppliers as well as indirect reputation risk related to the conduct of our suppliers, as disclosed in our risk factors (see page 11 in our FY20 Form 10-K and page 12 in our FY21 Form 10-K). We acknowledge that if our suppliers do not satisfactorily fulfill their responsibilities and commitments, or act or are perceived to act in socially irresponsible ways, it may damage our brand, and our financial results may suffer as a result. We have well over 15,000 suppliers around the world, including small, local operations to large, global entities and ranging from start-up companies to well-established ones. Each supplier is unique in terms of capacity, expertise and sophistication as well as in terms of being subject to local laws, standards and regulations. We do not know how future climate-change related regulations, including greenhouse gas emission standards, may impact our suppliers’ ability to comply with those regulations. This may indirectly affect our reputational risks and have a significant adverse impact to our financial results. We believe we sufficiently identified this in our risk factors, specifically the risk that if our business partners and third-party providers do not satisfactorily fulfill their responsibilities and commitments within the brand relevance and brand execution sub-section (page 12 of the FY20 Form 10-K and page 13 of the FY21 Form 10-K).

It is important to note that as part of our supplier management program and depending on the nature of supplier activities, we may perform due diligence when engaging with new suppliers to ensure we are doing business with companies who share our mission and values, such as initial inspection of facilities to ensure compliance with local labor, compensation and workplace safe standards and regulations. Suppliers providing food and beverage products are subject to inspections by various entities and regulators to ensure compliance with food safety standards and regulations. Furthermore, our manufactured goods suppliers are required to sign our Supplier Code of Conduct, which includes demonstrating commitments to the welfare, economic improvement and sustainability of the communities where goods and services are produced. When considered necessary, we perform diligence of certain existing suppliers to determine if they are meeting their contractual and other commitments to act responsibly on behalf of Starbucks. Our recent review methodologies, among other things, have focused on compliance and adherence to local laws and international standards regarding human rights, workplace safety, worker compensation and employee treatment. We will continue to assess our supplier standards for inclusion of supplier sustainability or other commitments as appropriate as well as adjust our review methodologies accordingly. These actions could result in increased compliance costs. We believe risks related to legal and regulatory requirements as disclosed in our risk factors (see page 18 in our FY20 Form 10-K and page 21 in our FY21 Form 10-K) adequately addressed our material exposures related to this topic.

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Your response to comment 2 states, in part, that you have not experienced material trends in decreased demand for goods and services as a result of greenhouse gas emissions. To support this statement, you cite sales of plant-based menu items which represented “much less than 10% of [y]our consolidated net revenues for each of the years ended September 27, 2020 and October 3, 2021.” Tell us about other factors you

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considered in determining the effects on demand for goods or services that produce greenhouse gas emissions or are related to carbon-based energy sources. In addition, explain in greater detail how you considered providing disclosure regarding reputational risks related to greenhouse gas emissions beyond compliance with laws and regulations.

We advise the Staff that while we have diversified our product offerings, including plant-based products in recent years, we expect our traditional products, such as dairy-based items, will largely remain on our menu and are expected to contribute positively to our financial performance. In addition, we are working proactively and collaboratively with experts, business partners and the farming community to identify best practices to reduce our collective environmental impacts and to improve sustainability of dairy, among other things.

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When developing and launching new menu items, we mainly focus on customers’ tastes and preferences. As mentioned in our original response, we believe customers select non-dairy beverages and meatless items for a variety of reasons, such as dietary restrictions, lifestyle and wellness, animal rights concerns, taste and others. We believe recent improvements to the taste, quality and consistency of plant-based alternatives are resonating with customers, helping drive adoption of this category and may also have added benefits of reducing adverse impacts on the environment. However, we do not measure our carbon footprint on a product-by-product basis to determine the marketability of each item. We have observed customers altering their purchases between animaland plant-based alternative products on a frequent basis, which may or may not be an ongoing trend. Other factors we consider when forecasting customer demand for food and beverage products include third-party category research, performance of prior product launches as well as source and availability of raw materials. We also estimate the products’ forecasted contributions to our food and beverage portfolios and expect plant-based alternative products to mostly have an equal or greater contribution to our operating margin trends when comparing to our traditional menu items. Further, we also regularly assess the sustainability of our packaging and strive to continually make incremental improvements in this area. For example, we first offered a 10-cent reusable cup discount in 1985, introduced compostable napkins in 2014 and introduced paper straw alternatives and strawless lids in 2018. These packaging improvements have not had a material impact on our operating costs.

Further, we advise the Staff that we have robust enterprise risk management processes in place to identify and mitigate material risks and uncertainties. In our risk factors, we disclosed risks related to brand relevance and brand execution (see page 11 of our FY20 Form 10-K and page 12 of our FY21 Form 10-K), including risks of any actual or perceived incidents where Starbucks might be viewed as not behaving in an ethical or socially responsible manner, which may extend beyond compliance with laws and regulations. We noted that our success depends substantially on the value of our brands and the failure to preserve their value could have a negative impact on our financial results. Furthermore, if we are not effective in addressing our social and environmental program goals, including our peopleand planet-positive work, or achieving relevant sustainability goals, our brand may suffer as disclosed in our risk factors (see page 13 of our FY21 Form 10-K). While we believe our FY20 Form 10-K and FY21 Form 10-K risk factors were complete and accurate, we do acknowledge risks related to environmental, social and governance (“ESG”) initiatives and disclosures, inclusive of climate change issues such as greenhouse gas emissions, will likely increase as certain investors are particularly interested in learning more about our ESG-related goals and progress. We expect our reputational risks will continue to evolve and will update our risk factors as our material risks change.

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Your response to comment 3 states that because you operate in over 80 international markets, the physical effects of climate change and resulting financial impacts have not been quantitatively material. Please provide more detail about the types of physical effects of climate change you have experienced and explain, with quantitative information, how you determined that the resulting financial impacts were not

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material. Also, provide us with support for your statement that you have not experienced any material change to the cost or availability of insurance. To the extent that you have considered the physical effects of climate change in estimating your insurance reserves, please tell us how it has affected your assumptions.

We advise the Staff that Starbucks does not track possible physical effects specific to climate change on our operations. We believe climate change may exacerbate the severity and increase the frequency of weather events; however, since it is impossible to determine if any one weather event is due solely or partially to climate change, we generally monitor and classify weather events as either “normal” or “catastrophic”, particularly in the U.S. We define “normal” weather events as those that cause a temporary disruption to our regular operations.

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Examples of “normal” weather events include hurricanes, typhoons, snowstorms and ice storms. As an example, we track estimated impacts of “normal” weather events to revenues on a regular basis, which includes frequent weather event tracking for our U.S. company-operated store portfolio. Estimated amounts of lost U.S. company-operated store portfolio revenues attributed to “normal” weather events were not material and were approximately $75 million, $20 million and $40 million, or 0.4%, 0.1% and 0.2% of United States total net revenues, for fiscal years ended 2021, 2020 and 2019, respectively. We advise the Staff that a large portion of our stores were closed or had reduced hours of operation during fiscal 2020 due to impacts of the COVID-19 pandemic, which materially impacted our United States total net revenues but was not considered weather-related. As a result of the limited operations of our U.S. company-operated stores during fiscal 2020, there was a much lower estimated impact on United States total net revenues for “normal” weather events. For fiscal 2021, our U.S. company-operated stores were re-opened, had fewer operating restrictions than fiscal 2020 and benefited from 6 and 156 net new stores when compared to fiscal years 2020 and 2019, respectively. Further, annual U.S. property damage costs, inclusive of all property incidents such as “normal” weather events, accidents, civil unrest or other causes, were less than $10 million annually for the fiscal years ended 2021, 2020 and 2019. We define “catastrophic” weather events as those causing other-than-temporary disruptions to our operations. Examples of “catastrophic” weather events include natural disasters that adversely impact the availability and access to basic resources, such as labor, utilities and our products, including roasted coffee. We have never experienced weather events we would consider to be catastrophic, including during fiscal years ended 2021, 2020 and 2019.

Furthermore, our access to and price of high-quality arabica green coffee may be impacted by weather events in producing countries that may be exacerbated by climate change; however, the price and supply of high-quality arabica green coffee is subject to significant volatility and can also be impacted by water supply quality and availability throughout the coffee production chain, natural disasters, crop disease and pests, general increase in farm inputs and costs of production, inventory levels, political and economic conditions and the actions of certain organizations and associations that have historically attempted to influence prices of green coffee through agreements establishing export quotas or by restricting coffee supplies. Due to the number of factors that can impact the supply and price of green coffee, we do not attempt to quantify each factor's impact. We believe we have adequately addressed the supply and price topics in our risk factors (see page 15 in our FY20 Form 10-K and page 18 in our FY21 Form 10-K) and the Product Supply section of Item 1 (see page 5 in our FY20 Form 10-K and page 9 in our FY21 Form 10-K).

To provide the Staff support, we have not experienced material changes to the cost or availability of insurance. We reported operating income of $4.9 billion, $1.6 billion and $4.1 billion for fiscal years ended 2021, 2020 and 2019, respectively. Global annual property insurance premiums, including incremental increases each policy renewal, were not material to our consolidated results. For our North America segment, the largest of our reporting segments, annual property insurance premiums for relatively comparable coverage with the same insurance company were less than $5 million for each of the fiscal years ended 2021, 2020 and 2019. Potential physical effects of climate change have not been a significant input used to develop property reserve estimates as we believe our exposure is generally limited to policy deductibles, which are not material.

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Your response to comment 4 indicates that you did not have any material litigation risks related to climate change. Please explain how you made this determination. In addition, tell us how you considered providing disclosure regarding the possibility of climaterelated litigation and its potential impact.

We advise the Staff that in the absence of clear regulatory guidance or an established body of caselaw, we define climate change-related litigation as a case where the primary allegations depend on (a) certain climate change impacts being attributed to Starbucks operations, (b) alleged failure by Starbucks to meet any applicable legal or regulatory requirements related to climate change or (c) alleged failure by Starbucks to adequately mitigate risks to our business due to the impacts of climate change.

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We have enterprise risk management processes to regularly identify and evaluate risks to our general operations including monitoring processes to identify, assess and track known and potential loss contingencies. In addition, we employ appropriate disclosure controls, including the review by an internal cross-functional disclosure committee. Through this process, as well as through the review of known claims and other threatened or pending litigation, we did not identify any litigation or the possibility of litigation risks related to climate change for our FY20 Form 10-K and FY21 Form 10-K. Should these circumstances change, and we become aware of material litigation risks related to climate change through our enterprise risk management or other processes, we would update our disclosures accordingly.

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Your response to comment 5 indicates that you did not experience any material increase in compliance costs related to climate change, specifically with respect to clean air and emissions restrictions. Please explain how you made this determination.

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In your explanation, please consider the compliance costs associated with your coffee roasting plants, other facilities that are subject to clean air and emissions restrictions, as well as the compliance costs associated with facilities in other “various jurisdictions.” Please contact Cara Wirth at (202) 551-7127 or Lilyanna Peyser at (202) 551-3222 with any questions.

We advise the Staff that we regularly monitor our costs of operations, including compliance costs related to climate change, as part of our financial planning and business review processes. The majority of costs incurred to date to promote our planet-positive agenda are related to equipment installations at our seven roasting plants that utilize available technologies to limit the impacts to the environment and to ensure compliance with local clean air and emission standards. These are typically capital expenditures incurred as part of regular upgrades or expansion of each facility.

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The expenses incurred are capitalized on our consolidated balance sheets and amortized over their respective estimated useful lives. When combining both our fiscal years ended 2021 and 2020, we invested less than $15 million in various new equipment for our roasting plants, such as new roasters which have flameless regenerative thermal oxidizer gas cleaning systems and new dust collection equipment. On a cumulative basis, we invested $6 million in onsite solar panels and related equipment to expand our use of renewable energy in one of our U.S.-based roasting plants during recent years. We believe these amounts are clearly immaterial when compared to our consolidated total assets of $31.4 billion and $29.4 billion as of October 3, 2021 and September 27, 2020, respectively. To date, we have not incurred material incremental costs to remove or replace specific items solely due to a new law or regulation, and we do not expect a significant change to the long-term trend of our capital expenditures. In certain international jurisdictions, we have also incurred climate-related compliance costs of less than $1 million for each of the fiscal years ended 2021 and 2020, primarily related to servicing and maintaining emission catalyzers and other air filtering equipment.

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Please tell us whether all of the costs below are included in cost of sales: • labor and benefits costs related to store employees preparing beverages, food and ground coffee, • distribution costs for inventory sent to company-owned stores, and • depreciation costs of store equipment used in preparing beverages, food and ground coffee.

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If all of these costs are not included in cost of sales, please also tell us how you determined that they were not required to be included or retitle this line item to better reflect what it represents. Refer to ASC 330-10-30.

We advise the Staff that we consider cost of sales to be the accumulation of costs incurred to source, acquire, manufacture and deliver finished goods for resale. Specifically, cost of sales primarily consists of raw materials, purchased goods and packaging costs as well as our supply chain organization’s operational costs, such as wages

U.S.

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Securities and Exchange Commission

Page and benefits, occupancy costs, depreciation expenses relating to manufacturing facilities and distribution operations and other costs, in support of sourcing, procuring, manufacturing, warehousing and transportation activities of products sold at our company-operated and licensed stores as well as through our Channel Development segment and other businesses. Also included are inventory and supply chain asset impairment costs. Accordingly, distribution costs for inventory provided to company-operated stores are included in cost of sales.

We consider products to be finished goods when sourcing, acquisition, production, manufacturing and distribution activities have been completed and the related products have been received at company-operated stores or at licensed partners’ stores, distribution centers or contractual destinations. Additional costs incurred at company-operated stores are more closely related to sales efforts and are classified as store operating expenses. Under this framework, wages and benefits related to store employees are included in store operating expenses; however, store equipment depreciation costs are included in depreciation and amortization expenses on our consolidated statements of earnings. With respect to store employee wages and benefits related to preparing beverages, food and ground coffee, it should be noted that such preparation time is not tracked separately and represents a fraction of regular tasks, which include:

welcoming customers, explaining menu items, informing customers about new items and limited-time-offerings, answering questions, handling complaints and accepting orders and payments;

operating cash registers and credit card machines;

managing supply orders;

taking inventory, replenishing items in display cases, behind the counter or in storage areas and restocking dining areas;

preparing and packaging beverage and food items for sale;

cleaning coffee and other machines, restaurant areas and restrooms;

emptying trash and sanitizing equipment and utensils;

updating signage and displays;

ensuring the store and equipment are in good working order and coordinating repairs and service;

working with field and corporate leadership on store performance, safety and security measures, promotions of new beverage and food items and customer reward programs; and recruiting, hiring and training new partners (employees) and training existing partners.

While both beverage and food preparation are an important component of store employee responsibilities, we typically expect, on average, the preparation time to be incidental to overall store operations and inventory turns to be fairly high. Furthermore, capitalizing beverage preparation overhead costs would be administratively burdensome since store labor is variable depending on each store’s circumstance (i.e., customer traffic patterns and composition, localized beverage availability and customization, variation of beverage equipment in each store, selection of stores testing new beverages, variations in wage rates, types of store formats and capabilities, etc.). Additionally, seasonal and other changes in our core product and limited time offerings would warrant frequent updates of overhead rates for inventory capitalization, which would require reliable detailed tracking, or some other means, of estimating every beverage, every day at every store. As food preparation generally involves defrosting or reheating products, we do not believe significant costs are incurred to be capitalized. Therefore, it is our view that wages and benefits relating to beverage and food preparation are relatively minor to the overall store operating costs and are predominantly supporting store and selling operations as opposed to inventory production. Furthermore, these costs would also represent a small fraction of the total costs we incur to source, procure, manufacture and distribute products to our stores. As a result, wages and benefits related to beverage and food preparation are included in store operating expenses, and depreciation costs of related store equipment are included in depreciation and amortization expenses, similar to depreciation costs related to other fixed assets in our stores. Further consideration surrounding our presentation and classification of these costs is provided in the immediately succeeding paragraphs.

As presented in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-K for the fiscal year ended September 29, 2019, we analyze store operating expenses as a percentage of net revenues from company-operated stores. We believe the inclusion of all costs incurred within our physical stores (such as wages and benefits related to store employees and occupancy costs) in store operating expenses provides a more meaningful and faithful metric of our store operating results. Additionally, we do not present gross margin, or net revenues less cost of sales, as part of our consolidated statements of earnings, nor does management use gross margin metrics to regularly evaluate performance.

Additionally, in accordance with ASC 360, we evaluate property, plant and equipment for impairment when facts and circumstances indicate the carrying values of such assets may not be recoverable. For company-operated store assets, the impairment test is performed at the individual store asset group level; that is, all fixed assets in each individual store are considered an asset group since the store represents the lowest level of identifiable cash flows. Inclusion of store equipment used in beverage and food preparation as part of the individual store asset group allows for a more meaningful impairment and performance evaluation of each store as well as our company-operated retail businesses, versus the alternative of comingling store-specific equipment with other warehousing and manufacturing assets, which support the entire enterprise

(i.e., multiple lines and channels of businesses).

We acknowledge ASC

330-10-30 addresses inventoriable costs and have observed the diversity in practice regarding how such costs are classified. Based on our considerations herein and given that we do not classify certain costs that bring final products to our end customers as part of inventory or cost of sales, we agree to change the description of the cost of sales caption to “product and distribution costs” on our consolidated statements of earnings beginning with the Form 10-Q for our fiscal quarter ending June 28, 2020. We will also expand our Summary of Significant Accounting Policies footnote to include additional disclosures as noted in our response to the Staff’s third comment.

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Please present the material components of the store operating expenses line item separately. Refer to Rule 5-03.3 of Regulation S-X.

With respect to presenting material components of store operating expenses, we believe the application of Rule 5-03.3 of Regulation S-X allows for judgment and have noted significant diversity in practice. Rather than aggregating all direct business operating expenses, our current presentation provides a clear distinction between store operating expenses and non-store operating expenses, which are captioned as other operating expenses on our consolidated statement of earnings.

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This distinction provides a meaningful segregation between costs incurred at our company-operated stores versus our licensing and Channel Development businesses. Furthermore, it provides insight into how store-related expenses contribute to the generation of revenues from our company-operated stores, as evidenced by our disclosures and analysis of store operating expenses as a percentage of related revenues. As operating income and, more importantly, operating margin are the line-items of primary focus in our investor communications, we believe our current disaggregation of operating expenses provides qualitatively and quantitatively sufficient and relevant information for investors to understand the drivers of our operating results and thereby meets the presentation requirements of Rule 5-03.3 of Regulation S-X.

To enhance transparency, beginning with our Form 10-Q for the fiscal quarter ending June 28, 2020, we will provide the material components of store operating expenses in the footnotes to the consolidated financial statements and present the dollar amounts for wages and benefits, occupancy costs and other expenses, which represented approximately 57%, 23% and 20%, respectively, of total store operating expenses for our fiscal year ended September 29, 2019.

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Please tell us and disclose in an accounting policy footnote the specific types of amounts included in cost of sales, store operating expenses and general and administrative expenses.

We advise the Staff that the specific types of amounts included in cost of sales (to be renamed “product and distribution costs”), store operating expenses and general and administrative expenses are as follows:

Product and distribution costs

Product and distribution costs primarily consist of raw materials, purchased goods and packaging costs as well as operational costs of our supply chain organization, such as wages and benefits, occupancy costs, depreciation expenses and other costs, in support of sourcing, procuring, manufacturing, warehousing and transportation activities of products

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sold at our company-operated and licensed stores as well as through Channel Development and our other businesses. Also included are inventory and supply chain asset impairment costs.

Store operating expenses

Store operating expenses consist of costs incurred in our company-operated stores, primarily wages and benefits related to store employees, occupancy costs, and other costs that directly support the operation and sales-related activities of those stores.

General and administrative expenses

General and administrative expenses primarily consist of wages and benefits, professional service fees incurred to support corporate functions, including technology, finance, legal and partner (employee) resources, and occupancy costs for regional and corporate offices.

Beginning with our Form 10-Q for the fiscal quarter ending June 28, 2020, we will include these line-item descriptions in our significant accounting policies.

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Please disclose your revenues from China or tell us how you determined that they were not material. Refer to ASC 280-10-50-41(a).

We advise the Staff that while our revenues are predominantly generated in the U.S., we continuously evaluate the significance of revenues earned in other geographic areas to our overall financial statements along with related disclosure requirements in accordance with ASC 280-10-50-41(a). We recognize China is currently our fastest growing market and second largest market overall.

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Revenues from our China market as a percentage of consolidated net revenues for each of the three years in the period ended September 29, 2019 were as follows: 11% (fiscal 2019), 10% (fiscal 2018) and 5% (fiscal 2017). We have historically applied judgment when evaluating our disclosures related to information by geographic area as ASC 280 does not prescribe a quantitative threshold for purposes of disclosing revenues from an individual country. However, interpretive industry guidance suggests that disclosure is prudent for revenue amounts of greater than 10% of consolidated revenue.

Based on the fact that we have historically presented revenues from our company-operated stores in China in earning releases and the considerations above, beginning with our Form 10-K for the fiscal year ending September 27, 2020, we will expand the annually required

Information by geographic area section of the Segment Reporting footnote to include net revenues from our business operations in China should they exceed 10% of consolidated net revenues in any of the periods presented. In the future, we may also disclose net revenues from other countries due to other qualitative factors.

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We note from your disclosure initial nonrefundable pre-opening service fees, including site selection and evaluation, store development and design and operational training, are recognized upon completion of service. Please clarify your revenue recognition policy to specify the performance obligations included in contracts for licensed store arrangements.

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Your revised disclosure should indicate the goods or services promised in your licensing arrangements that are distinct and those that are combined to form a bundled performance obligation. Further, please disclose why you believe it is appropriate to recognize preopening services upon completion of service. As part of your revised disclosure, please discuss the significant judgments made by management in evaluating the timing of satisfaction of the related performance obligations and when a customer obtains control of the promised good or service in accordance with ASC 606-10-50-17 and 19.

With respect to our revenue recognition policy for identifying and specifying the performance obligations included in our licensed store contracts, we analyze individual promises made in the contracts in accordance with ASC 606-10-25-14. For the purposes of identifying performance obligations, our customer is defined as the licensee who engages with Starbucks to open and operate a licensed store location. Each distinct promise that transfers to the licensee is either a good or service or series of similar goods or services identified as a performance obligation.

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We consider goods or services to be distinct if the licensee receives a benefit from the goods or services on their own or in conjunction with other resources that are readily available and if our promise to transfer the goods or services to the customer can be separately identified and distinguished from other promises in the contract (ASC

606-10-25-19).

Relative to the individual promises in our licensed store contracts, we have identified three distinct, bundled performance obligations:

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Additionally, please disclose the significant judgments made by management in determining pre-opening services are distinct from the license performance obligation, including the reason(s) why the associated revenues are satisfied at the point in time rather than over time.

Architectural/Design Performance Obligation: Site selection and the development and/or review of architectural plans and designs Read in the reply ↗

Please disclose revenue recognized during the reporting period that was included in deferred revenue at the beginning of the period. Refer to ASC 606-10-50-8.

As detailed above in our response to the

Staff’s first comment, we consider goods or services to be distinct if the customer receives benefits from the goods or services on their own or with other resources that are readily available and if our promise to transfer the goods or services to the customer can be separately identified and distinguished from other promises in the contract (ASC 606-10-25-19).

With respect to pre-opening services, these services are rendered before the license is transferred, and the utility of the pre-opening services is not enhanced by the license performance

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obligation, as the knowledge and outputs from these services are retained by the licensee without the support and maintenance of the license. At the point of store opening, the customer is provided a set of business and industry insights and knowledge that is separate and distinct from the license. As such, we concluded that the customer can benefit from the services on their own without access to the license. We also believe that our promise to deliver the pre-opening services is separately identifiable from the transfer of the license. Access to the license does not significantly affect the licensee’s ability to use and benefit from the pre-opening services, as the licensee has retained the value from our pre-opening services. Additionally, provision of the license does not result in significant modification or customization of the pre-opening services the licensee has already received. Lastly, the license and pre-opening services are not highly interdependent or interrelated because we sell access to our marks and licenses independent of any promise to provide pre-opening services. Pre-opening services are performed in the time period immediately prior to store opening, and the licensee obtains substantially all the benefit from the services once the store opens; as such, the associated revenue is recognized at that time.

We advise the Staff to refer to our proposed disclosures in our future filings stated under our response to Question 1 above.

Please disclose revenue recognized during the reporting period that was included in deferred revenue at the beginning of the period. Refer to ASC 606-10-50-8.

RESPONSE:

We advise the Staff that as we recognize revenue upon the completion of the pre-opening services, no such revenue was included in deferred revenue at the beginning of the period. In general, licensees do not prepay license fees or pre-opening services.

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Please disclose whether you elected to apply the new revenue standard retrospectively to all or only to contracts that were not completed as of October 1, 2018. Refer to ASC 60610-65-1(h).

We advise the Staff that we do not believe this disclosure is necessary, as our accounting treatment of pre-opening services was not changed by the new revenue recognition standard. Read in the reply ↗

Please revise your revenue footnote to include the disclosures required by ASC 606-1065-1(i) as it relates to income statement line items affected in the current reporting period by the application of the new revenue standard such as the accounting and reclassification of breakage income.

We advise the Staff that our accounting treatment of pre-opening services was not changed by the new revenue recognition standard. Therefore, no income statement line items were impacted upon our adoption of the guidance for licensed store revenue, except for the change in accounting reclassification of breakage income that is included in our current disclosures. Read in the reply ↗

Please explain to us why you believe recognition of the upfront payment of $7 billion from Nestlé on a straight-line basis over the estimated economic life of the arrangement provides a faithful depiction of the transfer the promises in licensing arrangement.

We advise the Staff that the upfront payment of $7 billion from Nestlé represents a prepayment for using our brands, trademarks, and trade names during the contractual term of the arrangement. Therefore, we consider that the performance obligation is a promise to a right to access our intellectual property. ASC 606-10-55-59 provides guidance on the characteristics of symbolic intellectual property:

[…] b Symbolic intellectual property. Intellectual property that is not functional intellectual property (that is, intellectual property that does not have significant standalone functionality).

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Because symbolic intellectual property does not have significant standalone functionality, substantially all of the utility of symbolic intellectual property is derived from its association with the entity’s past or ongoing activities, including its ordinary business activities.

Furthermore, ASC 606-10-55-60 requires that revenue from licensing symbolic intellectual property should be recognized over time if both of the following conditions are met:

[…] a Grant the customer rights to use and benefit from the entity’s intellectual property b Support or maintain the intellectual property. An entity generally supports or maintains symbolic intellectual property by continuing to undertake those activities from which the utility of the intellectual property is derived and/or refraining from activities or other actions that would significantly degrade the utility of the intellectual property.

As a consumer products company, our enterprise value is largely derived from our brand, trade logo, and trade names. As such, we will support, maintain, and protect these symbolic intellectual properties for the foreseeable future and certainly during the term of our arrangement with Nestlé. From a customer’s perspective, Nestlé began accessing the rights to use our brand and trademarks since contract inception and is expected to continue to do so throughout the term of the arrangement in order to market the products effectively. As the vendor in this arrangement, Starbucks has a license performance obligation that includes continuously providing access to the licenses within the contractual territories. Furthermore, Starbucks obligation to maintain the brand is the same every period throughout the term, and therefore the ratable recognition pattern is reflective of how the Company satisfies its obligation, which is the same each period.

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We note your response to our prior comment number 3 however our comment was not intended to be specific only to license revenues. As previously requested, please disclose revenue recognized during the reporting period that was included in deferred revenue at the beginning of the period.

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We note from your footnote that beginning deferred revenue balance for 2019 was $906.6 million relating to your stored value card and loyalty program. Please disclose the related amount recognized during the period as well as any amortization of deferred revenue related to the Nestle royalty prepayment that was included in the beginning 2019 balance. Refer to ASC 606-10-50-8.

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We note your response to comment 5 however our comment was not intended to be specific to license revenues. In this regard, please revise your revenue footnote to include the disclosures required by ASC 606-10-65-1(i), including the related amounts of the income statement line items affected in the current reporting period by the application of the new revenue standard such as the accounting and reclassification of

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breakage income.

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We note your response to comment 6. Please revise your disclosure to include your explanation of why recognition of the upfont payment of $7 billion on a straight-line basis over the economic life of the arrangement provides a faithful depiction of the transfer of goods or services pursuant to ASC 606-10-50-18.

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