Looks like even that 20% premium Starbucks pays to the Swiss office wouldn\’t get them into profit.
As the FT says, sales of £398 million.
Even after you put back in the royalty and the interest to the parent company, there\’s a £5 million loss.
But what\’s the size of that payment to Switzerland then? That 20% margin?
Assume that all Starbucks sells is coffee. At £3 a cup (about right?).
You can get 32 cups of coffee out of a lb of coffee beans. Coffee beans cost $1 a lb (all close enough).
So Starbucks gets £96 of sales out of a $ on beans, yes?
£398 million of sales is $4.1 million of coffee beans. On which a 20% margin is $800,000.
But they\’re making a £5 million loss: so even if we add this back in again they\’re still making a £4.4 millionish loss in the UK.
They\’re just not making a profit to be taxed upon, are they?