Here's Why Starbucks' Most Important Number Is $400 Billion

There are lots of ways to break down the numbers for a restaurant chain, but only some are truly significant to its operations and its potential. Total sales, gross margins, and net profit are just a few metrics that immediately come to mind. But arguably, a very important number for a company's success is its total addressable market (TAM).

The TAM, also sometimes referred to as the total available market, is an educated estimate of the total potential demand for the company's products and services in a given year. Knowing the figure can help in determining the growth opportunity that might be available to the company.

In Starbucks' (NASDAQ: SBUX) case, the TAM for coffee is forecast by the company to grow to $400 billion annually by 2024. As popular as Starbucks is worldwide, its total sales still represent just a fraction of that market, indicating a real potential for continued growth.

Source Fool.com