Bloomberg News

Starbucks to Bring Alcohol Sales to Thousands of Stores

March 20, 2014

Starbucks

Starbucks Corp., which has offered company stock for store workers for more than two decades, will now begin picking up most of the college tab for its employees. Photographer: Ron Antonelli/Bloomberg

Starbucks Corp. (SBUX:US) is going big on booze.

Starbucks will expand its evening alcohol and light bites menu, which includes bacon-wrapped dates and Malbec wine, to thousands of stores, Chief Operating Officer Troy Alstead said in a phone interview. The rollout will take several years, he said.

“We’ve tested it long enough in enough markets -- this is a program that works,” he said. “As we bring the evening program to stores, there’s a meaningful increase in sales (SBUX:US) during that time of the day.”

Starbucks has been focused on selling more non-coffee items, such as alcohol, juice, Teavana tea and food, to stoke U.S. growth. The company, which announced a long-term plan to almost double its market value to $100 billion yesterday, also is expanding and improving its rewards program and mobile applications. Earlier this month, Starbucks said it would soon test a way for customers to order items ahead of time with their smartphones.

The shares (SBUX:US) rose 1.4 percent to $76.96 in New York. The Seattle-based company closed today with a market capitalization of about $58.2 billion.

The company first sold alcohol in October 2010 at a Seattle store. In January 2012, Starbucks said it was expanding the test to as many as 25 locations in Chicago, Atlanta and Southern California. In Chicago, the after-4 p.m. menu includes fare such as truffle macaroni and cheese, chicken skewers, Chardonnay and chocolate fondue.

Urban Areas

The evening food and drinks, which are in about 40 stores now, won’t work in all Starbucks cafes, Alstead said. He said they’ve seen success in some urban areas, near other restaurants and theaters, where people are out at night.

Last month, Chief Executive Officer Howard Schultz handed over the company’s day-to-day operations to Alstead, so Schultz could focus more on digital, mobile, loyalty and electronic-commerce initiatives. The company said yesterday in a statement that its mobile-payment application has been gaining traction.

Mobile payment now accounts for 14 percent of in-store transactions in the U.S., up from a 10 percent rate disclosed in July. Starbucks also said it will open at least 20 additional Teavana stores in the current fiscal year.

“Mobile is very important,” Peter Saleh, a New York-based analyst at Telsey Advisory Group, said in a phone interview. “The companies that are taking share are the companies that have some mobile, digital platform -- Papa John’s (PZZA:US), Domino’s, Starbucks, Dunkin’.”

Loyalty Program

Starbucks’s loyalty program entices diners by offering free beverages, food and refills in return for points they’ve accumulated from purchases. Customers can pay with mobile phones or Starbucks cards that are linked to their account.

As part of its effort to sell more tea, the company will begin offering Oprah Winfrey-branded chai tea on April 29 at stores in the U.S. and Canada, Schultz said at the company’s annual meeting yesterday. Winfrey, the television personality and entrepreneur, tasted different tea varieties and helped Starbucks create the blend, which includes black and rooibos teas.

“This felt like something that I really loved, that I really cared about,” Winfrey told Schultz at the meeting. Starbucks will donate money from the tea’s sales to charities that support youth education.

Starbucks bought (SBUX:US) Teavana Holdings Inc. last year in a transaction valued at about $626 million. It has since been expanding the brand and plans to open tea bars in Chicago and Los Angeles this fiscal year.

Starbucks has more than 20,100 locations worldwide, including about 11,500 in the U.S.

To contact the reporter on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net Kevin Orland


Reviving Keynes
LIMITED-TIME OFFER SUBSCRIBE NOW

Companies Mentioned

  • SBUX
    (Starbucks Corp)
    • $77.32 USD
    • 0.78
    • 1.01%
  • PZZA
    (Papa John's International Inc)
    • $45.79 USD
    • 1.10
    • 2.4%
Market data is delayed at least 15 minutes.
 
blog comments powered by Disqus