To help it better compete with high-end specialty coffee shops, Starbucks is launching Starbucks Reserve Roastery and Tasting Room in 2015, which will be dedicated to roasting, coffee education and increasing the availability of its fast-growing, small-lot Starbucks Reserve coffees.
The consolidation of small-batch roasting will allow the company to expand its 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 its customer base, Starbucks also plans to test small-footprint, express stores focused on customer convenience.
“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 CEO 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 Starbucks Reserve Roastery and Tasting Room. A first-of-its-kind union for Starbucks of “coffee theatre and manufacturing,” the Seattle location will allow the company 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 fiscal 2015, the company said in a statement.
More than two years in development, the Reserve Roastery and Tasting Room will allow customers to engage with the “Starbucks’ passion for coffee in a 15,000-square-foot interactive retail environment devoted to beverage innovation and excellence,” the company said.
Starbucks first brought premium coffees to customers 10 years ago through its Black Apron Exclusives. Formally launched in 2010 under the Starbucks Reserve brand, the small-batch arabica coffees became available in select stores and online, some of which have sold out in less than 24 hours, the company reported. In 2011, Starbucks opened its first international Starbucks Reserve store in Tokyo, and by the end of fiscal 2014, will be available in 21 countries.
Starbucks 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 percent, exceeding the best-in-class investment ratio of 2-to-1, the company reported.
Starbucks also 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 percent of U.S. company-operated stores and higher than average sales growth compared to non-drive-thru locations, “there is significant opportunity to meet commuting customers in smaller experiences,” the company said in a statement.
“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 for Starbucks and Teavana.
In addition to providing a concentrated set of beverage and food offerings, the express formats will integrate Starbucks’ digital payment platform, including mobile ordering, to expedite speed of service. 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 expedite merchandise and at-home coffee purchases, or subscriptions for take-home or home delivery.
Starbucks said it is on track “to bring approximately 1,550 net new stores in fiscal 2014 and 1,600 net new stores in fiscal 2015, with nearly 300 net new company-operated locations in the U.S.”
