Posted by: Olgen K. Ifti | October 21, 2010

Starbucks revamping, with a buzz – The Globe and Mail

The original Starbucks store, in its second lo...

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Starbucks (SBUX-Q27.29-0.16-0.58%) is racing to serve up a cappuccino with an extra twist.In past weeks, it has rolled out a spate of new initiatives to diversify beyond basic coffee. It’s testing beer and wine at one of its stores, and pumping up its instant coffee business with new flavours. On Wednesday, the U.S.-based coffee chain extended its free online offerings by promising U.S. customers e-books, movies and other exclusives, including no-charge access to some paid websites. On the café front, it’s giving instructions to its baristas to focus on mixing a quality drink, even if it takes more time.

It’s part of the iconic coffee chain’s efforts to keep customers coming back to its stores, lingering longer and spending more, amid heated competition on its home turf and few opportunities to open new cafés.

“This chain needs to refocus on not becoming bigger but becoming better in its existing units,” said Jack Russo, a retail analyst at Edward Jones in St. Louis.

Starbucks is borrowing from the playbook of fast-food chain McDonald’s Corp. by concentrating on improving business in its existing cafés, closing underperforming stores and looking overseas for new store sites. Its philosophy in North America is simple: Add more bells and whistles to generate more sales from current store space.

So far, the efforts appear to be paying off. Since founder Howard Schultz stepped back into the chief executive role almost three years ago, the upscale coffee chain is getting back its mojo. After slumping sales in 2008 and 2009, business began to perk up this year at stores open a year or more. Now it has to keep up the momentum in a shaky economy as McDonald’s and other rivals fiercely chase the fancy coffee habit.

via Starbucks revamping, with a buzz – The Globe and Mail.


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