Summary
⚈ The company earns over $200 million annually from unused loyalty cards and rewards.
⚈ Breakage revenue contributes about 4% to Starbucks’ annual profits with minimal cost.
Coffee giant Starbucks has seen better days. A CEO transition, sluggish sales, boycotts, and rising costs have led the company to suspend 2025 guidance.
The company held its latest earnings call, covering Q2 2025, on Tuesday, April 29. Earnings per share (EPS), revenues, and sales all came in below consensus estimates.
At press time, Starbucks stock (NYSE: SBUX) was changing hands at $79.03, some 31.75% less compared to a February 28 all-time high (ATH) of $115.81, and down 13.40% on a year-to-date (YTD) basis.
However, present challenges are offset, at least partly, by an ace up the coffee chain’s sleeve — the fact that people give it roughly $200 million in free money each year.
Breakage revenue provides Starbucks with $200 million in free money
According to data retrieved by Finbold from a recently published Form 10-Q filing that the company submitted to the Securities and Exchange Commission (SEC), it currently maintains some $1.85 billion in stored value cards and loyalty program benefits.
At this point, you might be saying — wait a minute, that isn’t free money — but a part of it actually does end up that way. Not all of those benefits and value cards are redeemed — and this is referred to as breakage, which basically amounts to free revenue.
In 2024, breakage revenue came in at $187.6 million in company-operated stores, with another $20 million from licensed stores, for a grand total of $207.6 million.
While it isn’t a major windfall, as it accounts for roughly 4% of the company’s annual profits, seeing as how the investment costs are basically negligible, breakage revenue still represents an appreciable boon for Starbucks’ finances.
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