Press Release: Starbucks set to open high-end concept

[Jenise]

And Seattle gets the first one: how appropriate!


Starbucks Reserve™ Roastery and Tasting Room to launch in Seattle this winter; unique theatre and premium coffee experience set to open in strategic markets around the world

First dedicated super-premium Starbucks Reserve® coffee stores to open in FY15 with 100 global locations coming over the next five years

New express store platform opening in New York City early 2015

Starbucks Coffee Company today announced the expansion of the company’s store formats and evolution of their customer experience segmentation in FY15 with the launch of a one-of-a-kind, interactive Starbucks Reserve™ Roastery and Tasting Room dedicated to roasting, coffee education and increased availability of their fast-growing, highly successful small-lot Starbucks Reserve® coffees. This consolidation of small-batch roasting will allow the company to expand their Starbucks Reserve® coffee line to 1,500 locations globally, as well as open at least 100 stores designed to highlight these rare coffees exclusively. Recognizing the diversity of needs across their customer base, Starbucks also plans to test small-footprint, express stores focused on offering convenience to customers. This evolution in store experience builds on the profitability of tailored, localized store design and formats.

“Everything we have created and learned about coffee has led us to this moment. The Starbucks Reserve Roastery and Tasting room is a multi-sensory experience that will transform the future of specialty coffee,” said Howard Schultz, chairman, president and chief executive officer of Starbucks. “We plan to take this super premium experience to cities around the world, elevating the Starbucks experience not only through these stores but across our entire business.”

In December, Starbucks plans to open its first-ever Starbucks Reserve™ Roastery and Tasting Room designed to be an integrated coffee roasting, education and retail space allowing the company to expand its small-lot sourcing program and to serve as homage to the rich history of specialty coffee. A first-of-its-kind union for Starbucks of coffee theatre and manufacturing, this iconic Seattle destination will allow Starbucks to double its small-batch roasting capacity and grow its Starbucks Reserve® coffee presence from 800 to 1,500 stores worldwide, by the end of FY15. More than two years in development, this unprecedented experience will allow customers to engage with Starbucks passion for coffee in a 15,000 square-foot interactive retail environment devoted to beverage innovation and excellence.

Ten years ago, Starbucks first brought these premium coffees to customers with their line of Black Apron Exclusives™. Formally launched in 2010 under the Starbucks Reserve brand, this exceptional collection of unique, small-batch arabica coffees became available in select stores and online – some of which have sold out in less than 24 hours. In 2011 Starbucks opened its first international Starbucks Reserve® store in Tokyo, Japan and by the end of FY14 will be available in 21 countries. As China becomes the second largest market for Starbucks in 2015, Starbucks Reserve® coffee will be integrated into this specialized, day part growth model. Recently, Starbucks opened its first ever Starbucks Reserve® location in Latin America as part of a three-level store serving 100 percent Colombian coffee and is on track to exceed over $1.5 million in year one sales. On Monday, September 8, Starbucks will offer customers a first-of-its-kind Starbucks Reserve® coffee developed by Starbucks head of agronomy Carlos Mario Rodriguez in partnership with a Costa Rican cooperative on the La Ines coffee farm.

In addition to expanding this in-store offering, the company will create a specialized store experience devoted to highlighting these rare, limited availability coffees in at least 100 locations in the next five years. These locations will benefit from ongoing new store development and renovation programs delivering an enhanced customer experience. In 2014, the new U.S. store portfolio averaged over $1.2 million in year-one sales with a return on investment of approximately 50% exceeding the best-in-class investment ratio of 2 to 1.

Complementing this expanding café experience, Starbucks will be investing in smaller, alternative store footprints that address the increase in urbanization and decentralization of retail. With Drive Thru stores accounting for more than 40% of U.S. company-operated stores and higher than average sales growth than non-Drive Thru locations there is significant opportunity to meet commuting customers in smaller experiences.

“The evolution of our store experience is a direct reflection of how our customers are interested in both accessibility to the brand as well as speed and convenience. Our scale affords us the unique opportunity to bring a flexible portfolio of options rooted in our core commitment to coffee quality,” said Cliff Burrows, group president, U.S., Americas, and Teavana.

In addition to providing a concentrated set of beverage and food offerings, the express formats will look to integrate Starbucks digital payment platform, including mobile ordering to expedite speed of service in these locations. The growth of Starbucks digital payment applications and online presence will also allow the company to identify opportunities where store segmentation can support an enhanced physical and digital retail experience to expedited merchandise and at home coffee purchases or subscriptions for take-home or home delivery.

Starbucks is on track to bring approximately 1,550 net new stores in FY14 and 1,600 net new stores in FY15 with nearly 300 net new company-operated locations in the U.S.

I thought Starbucks was already a high-end concept. Am I the only one who remembers the sticker shock the first time I saw a $5 cup of coffee? I think they are just inching us up to that $25 cup. I know that's possible to find now, but you have to go out of your way. Anyone want to do a high/low on when we see it on Main Street USA?

[Jenise]

Ken, you have a point.

But I'll be there shortly after they open to give a first-hand report from the ground. I like the concept a lot--a tasting bar for coffee, in a way. It's also going to be paired up with a new location for Tom Douglas's pizzeria, Serious Pie. And that's TWO good reasons to show up.

Never been to a Starbucks. I'm a Dunkin Donuts guy when I buy coffee.

[Jenise]

Considering how ubiquitous Starbucks is, even in airports, that's quite a feat, Tom! You'd almost have to studiously avoid them to make that work out.

Have you ever been to Boston? DD on every street corner it seems.

I confess that I went to SB ONCE. Exactly once, about 7 or 8 years ago. I'm more a brew my own at home or if I'm out and need a fix a simple black cup-a-joe at Speedway or Thornton's does the trick. Life's grande?

I am a frou frou drink kind of guy...like my iced mocha drinks. And Starbucks iced mochas are awful, imho. (Also like espressos as my other choice. Sh&t Cyclists Do and all that!)

They have clean bathrooms, are ubiquitous, and make fruit-based green coffee "refresher" drinks that are far tastier than Gatorade, so are great for bicycling!

I very rarely stop at Starbucks here in Sacto. There are too many other places with better coffee. When traveling, though, it's a different story. At least with Starbucks, you know what you're getting.

I think I've mentioned this before, but I think Starbucks would be doing their best work if they had a place every 100 miles or so along each of the major interstate routes. Those on long drives could get a coffee, and then stop and use a decent restroom and get another coffee every hour and a half or so...

Starbucks is usually a stop for us on road trips. Like others mentioned- decent rest rooms, decent coffee (their house brew usually suffices although their frappuccinos are a good sugar rush for road fatigue). When I am home, Starbuck is seldom an option as we have excellent local coffee houses here in Reno.

[Jenise]

Until I read your posts I didn't realize how often my Starbucks stops are determined by the bathroom need. Quite often truth be told, and since I won't do something like use a bathroom and not buy something to earn the privilege of premesis, I will then buy something. But I don't hate Starbucks. I'm a lucky shareholder whose first 300 shares have turned into thousands and I don't mind being a customer. And though I tend to buy most of our beans from a local roaster, my favorite coffee bean of the moment comes from Starbucks--a medium roast blend of Ethiopian and Kenyan coffees that's as smooth as it is rich. Utterly fantastic stuff.

Yeah, some of their beans are pretty good. I normally get mine at the grocery store but I have been caught out at times with none at home. Starbuck's is open at 5 AM, so I can easily drag my dismal, coffee-deprived self over there to pick up a pound of beans and get back home to my morning routine.

[Jenise]

I highly recommend this new mix--it's called some African sounding name not unlike Katie, but not that. We discovered it on our last road trip--when travelling in Fritz, wherein we have French press individual mugs but not a grinder--but usually whole bean that's ground for us, not pre-ground, and Starbucks is a perfect source in parts of the country that may not have anything else nearby with so high a turnover. Was lucky to find some in Vancouver last week so we restocked, in fact bought two pounds which is kind of unheard of for us. Kind of the good/bad about Starbucks--you can't always get the same thing twice, but for those of us who enjoy variety there's always something new/different to try where our local roasters all pretty much just do the same blends all the time.

I only visit Starbucks at airports, and even then only if there isn't a Dunkin' Donuts available. Of course, DD is ubiquitous here in New England.

-Paul W.