Starbucks says more than $1 billion is sitting on gift cards

  • Starbucks Cards are bigger than the entire gift card industry, according to CEO Howard Schultz.
  • Customers put billions of dollars on cards each year as an interest-free loan at the chain.
  • Tens of millions of dollars in gift cards are never claimed and recorded as revenue.

Starbucks just revealed that a whopping $1 billion is sitting in unused Starbucks gift cards. Acting CEO Howard Schultz told investors on a second-quarter earnings call that the cards are used by more than 120 million people.

Every year, millions of people give and receive Starbucks gift cards, which can both attract new customers and create convenience for existing customers. The coffee chain offers thematic menus around dozens of occasions, from birthdays and Christmas to Mother’s Day and teacher appreciation. They’ve become something of a must-have gift for people you don’t necessarily know very well, and they’re available everywhere, including Amazon, Walmart, and the Starbucks website.

Starbucks has forecast $3 billion in holiday gift card spending in 2021 as they have become ubiquitous gifts. Customers bought 46 million cards in 2020, totaling $12.6 billion in gift cards for the year.

Starbucks has successfully convinced customers to adopt Starbucks Cards. Starbucks Cards alone are bigger than the entire gift card industry, Schultz said on the earnings call. Customers load money onto the cards to prepay for orders, which totaled $11 billion in 2021. The chain is expected to surpass that figure so far this year, Schultz said.

Gift cards can be a boon for retailers because recipients often don’t use the full amount. This essentially offers free money to the card issuer, as nearly 40% of 18-29 year olds lose their gift cards before they can spend them, and about 25% of 30-64 year olds do the same. In 2020, that amounted to $164.5 million in Starbucks gift cards that were never redeemed. This money was recorded as income, essentially a gift to the channel.

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Michael N. Clark