Starbucks (SBUX) is slowly adding a shot of banking to its grande coffee empire. As customers pour money into its gift cards and its mobile-payment app, the Seattle-based company is booking a tidy profit simply by holding onto customers’ cash.
Starbucks reported yesterday that its customers added $1.4 billion to its payment platforms in the past quarter, a figure no doubt boosted by a brisk trade in gift cards given as stocking stuffers last month.
Even to a company the size of Starbucks, that sum is impressive—it represents one-third of total sales in the period. Of course, Starbucks can’t recognize that cash as revenue until it is exchanged for drinks and snacks, but that doesn’t stop the company from investing it. Starbucks money managers are fond of high-grade corporate bonds, Treasury notes, and certificates of deposit that mature in three to 12 months, according to the company’s SEC filings.