Quick Verdict
Starbucks (SBUX) is DOUBTFUL to NOT COMPLIANT under most Islamic screening frameworks. The primary concern is Starbucks' Evenings program, which serves beer, wine, and cocktails in select locations. Secondary concerns include Starbucks' debt levels and brand controversies in Muslim markets.
Starbucks' Alcohol Revenue
Starbucks began offering alcohol at select "Starbucks Evenings" locations starting around 2010 and expanded the program. While Starbucks has scaled back some of these locations, alcohol remains available at hundreds of stores worldwide.
The key question: what percentage of Starbucks' total revenue comes from alcohol? This is not publicly disclosed, but analysts estimate it's likely under 5% — possibly well under. The majority of Starbucks revenue is coffee, tea, food, and merchandise.
Financial Screening
- Debt / Market Cap: Very high (~60%+ of market cap) ❌
- Interest Income / Total Revenue: Minimal ✅
- Alcohol Revenue / Total Revenue: Estimated under 5% ⚠️
Starbucks fails on debt ratios regardless of the alcohol question. The company has taken on enormous debt through buybacks and has negative book value. This alone disqualifies it from most Islamic portfolios.
The Boycott Context
It's worth noting that Starbucks has faced significant boycotts in Muslim-majority markets over political reasons unrelated to halal compliance. This doesn't affect the Islamic finance screening, but it's relevant context for investors considering the company's growth in those markets.
Screening Agencies' Verdict
- Zoya App — Not Compliant ❌
- MSCI Islamic Index — Excluded ❌
- Most halal ETFs — Not held ❌
Bottom Line
Starbucks fails Islamic screening primarily on debt ratios, with a secondary concern around alcohol revenue. Even if the alcohol revenue is technically under 5%, the balance sheet issues alone would disqualify SBUX from most halal portfolios. Look elsewhere for consumer sector exposure.
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