Starbucks launches premium coffees
In keeping with its menu-innovation strategy, Starbucks (SBUX) introduced Flat White, a beverage that offers “premium coffee quality,” according to the company. Starbucks also reports that its Roastery in Seattle, which offers customer a unique premium experience, has received wide acceptance. Roastery offers micro-lot, limited Starbucks reserve coffee. The company plans to eventually expand this offering to 1,500 Starbucks locations. It also plans to open a second Roastery in Asia during 2016.
The company hopes that other product initiatives will increase customer loyalty at its stores. For instance, Starbucks is testing two delivery models that it expects to roll out in the second half of the year. It also ran a “Starbucks for Life” campaign during the holiday season. And, according to the company, it received 13 million entries.
Starbucks is held by the Consumer Discretionary Select Sector SPDR Fund (XLY).
Opening Reserve stores
Starbucks plans to open 100 Starbucks Reserve stores in the coming years. The company will sell small-lot, rare, and limited coffees that offer a more premium experience to its customers.
Starbucks is also testing an express model that would offer a streamlined menu integrated with its Mobile Order & Pay app. Express locations would allow the company to leverage smaller stores in high-density places such as New York.
The US is undergoing a demographic shift and restaurants such as McDonald’s (MCD), Yum! Brands (YUM), Wendy’s (WEN), and Panera Bread (PNRA) are increasingly changing their strategies to attract younger customers.
Next, we’ll look at Starbucks’s Teavana business.