RISE - Menu Monitor

Also, Starbucks has developed other ventures, such as its Pepsi Cola/Frappucino Coffee drink, a joint undertaking and that is
sold in supermarkets. Other ready-to-drink retail items include the Starbucks DoubleShot espresso drink and bottled Starbucks
Frappaccino brands. Another enterprise is a joint venture with Dreyers Ice Cream to market a line of seven different coffeeflavored
ice creams. A licensing agreement with Kraft Foods, Inc. in 1998 has brought the Starbucks brand into the
grocery/retail channel as well. In addition to the presence of Starbucks' prepackaged goods in grocery/retail stores, the chain
continues to expand by opening grocery-based units. In early 2006, Starbucks announced its intent to launch nearly 50 new
units inside of Stop & Shop supermarkets in New York and New Jersey, with additional sites planned throughout New England
through 2007. In addition, coffee-related products, hardware and equipment are also carried in each of its stores, including its
private line of Starbucks Barista home espresso machines and coffee brewers and grinders.
The company dates back to 1971. Howard Schultz joined it in 1982 and bought it in 1987 under the Il Giornale company. In
1992, an initial public offering of 2.1 million shares was tendered. In mid-1994, acquisition of The Coffee Connection, Boston,
was completed. It also acquired a minority interest in Noah's New York Bagels, now part of Einstein Bros./Noah’s New York
Bagels, in 1996. In 1998, the company acquired Seattle Coffee Holdings Ltd., London, in a stock deal as a means to gain an
immediate presence in the U.K. and a base for future expansion into other European markets. In late 1998 and early 1999,
Starbucks announced more acquisitions: Pasqua Coffee, San Francisco, and Tazo, Portland, OR. Pasqua is a 48-unit coffee
chain and Tazo is an upscale tea operation. In 2003, Starbucks acquired Seattle Coffee Company, which includes Seattle's
Best Coffee and Torrefazione Italia Coffee, from AFC Enterprises for $72 million. In 2006, Starbucks announced that the
company will acquire 11 Peaberry Coffee shops in Colorado. That same year, Starbucks acquired 40 company-owned
Diedrich Coffee and Coffee People units for $13.5 million.
Starbucks also entered into agreements with grocers Albertsons, Inc. and Safeway, as well as with hospitality companies,
such as Hyatt Hotels Corp. and Marriott International, Inc. Besides expanding its market share, the chain has also begun
offering its customers wireless Internet access in 2001. In 2004, Starbucks partnered with Hewlett Packard to launch its Hear
Music CD burning service, a retail digital music service available to Starbucks customers. In addition, Hear Music
Coffeehouses were launched by Starbucks in San Antonio, TX, and Miami. The first Hear Music Coffeehouse, which offers
over one million music tracks for customers to sample and burn, opened in Santa Monica, CA, in 2004.
Starbucks is eyeing China for aggressive expansion. The company estimates that China will eventually be its second-largest
market outside of the U.S. There are currently fewer than 300 Starbucks outlets in operation in China. The United Kingdom is
a booming market for Starbucks, with nearly 200 units located in London alone. Starbucks has planned new units for Brazil,
Central America, India and Russia, which are scheduled to debut in late 2007 or early 2008. Domestically, Starbucks is
currently targeting Chicago for expansion with plans to add 250 units in the city over the next five years. Starbucks’ worldwide
goal is the operation of 45,000 units. The company has estimated the launch of 100 new units per year over the next five
years. In addition, the company has identified its drive-thru prototype as being crucial to growth of the chain. Over the past 12
months, Starbucks has launched over 350 drive-thru stores. Drive-thru locations now comprise 15% of all domestic units.
Menu Positioning |
Starbucks' menu features a variety of gourmet coffees, sold by the cup or by the bag, cappuccinos, frappucinos, as well as a
line of Tazo teas. All drinks are available in sizes Tall (small), Grande (medium) and Venti (large). Also available are bakery
items, pastries, and dessert snacks, such as cupcakes (Vanilla Sunshine or Chocolate Chocolate) and cookies. In early 2006,
Starbucks announced a partnership with Kellogg's to market Grani, a cup filled with low-fat granola, steamed milk and a variety
of add-ins like fruit and caramel sauce, with plans to eventually rollout the product in supermarkets. Other new retail items
include ready-to-drink Starbucks Iced Coffee beverages, available in an 11-oz. can in both regular and light versions.
Signature items include Caramel Macchiato, Caffe Mocha, Caramel Apple Cider and Vanilla Latte, all served hot or cold. In
2006, Starbucks announced that the chain will add one new drink to its menu per season. Favorite food items include Sesame
bagel, Vanilla Almond Biscotti, Iced Lemon Pound Cake and Raspberry Scone. Starbucks has also increased the number of
stores that menu hot breakfast and lunch sandwiches. Stores in major markets such as New York, Chicago, San Francisco
and Washington, D.C. have offered Starbucks' warm food line since mid-2006. The breakfast sandwich selection includes
Peppered Bacon, Egg & Cheddar Cheese; Sausage, Egg & Cheddar Cheese; Reduced Fat Turkey Bacon, Cholesterol-Free
Egg & Reduced Fat White Cheddar Cheese; and Virginia-Style Ham & Fontina Cheese. Lunch sandwiches now available
either hot or cold include Tomato Mozzarella Basil and Chicken Cheddar Club. Other new menu additions in 2006 included its
new yogurt parfait with layers of fruit and granola. No alcohol is available in units. Starbucks Cream Liqueur is now available in
more than 35 U.S. markets. Starbucks partnered with Jim Beam to produce the liqueur, which will be sold in bars, liquor stores
and restaurants. Starbucks also responds to seasonal tastes by offering special beverages and baked goods during colder
months, such as its Maple Streusel Muffin, Maple Macchiato and Pumpkin Spice Latte. Menu prices are from 90¢–$5.95.
Checks average $4.38.
Expansion Plans |
Starbucks plans to open a kosher café in Oak Park, IL, featuring kosher creamers and milk. The company has city approval,
but hasn’t signed a lease agreement. (Freep.com 11/10/06)
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