Feature Story Frank Simpson

Frank Simpson
Starbucks Brews Up a New Idea
Starbucks regulars might have something stronger to drink than coffee in the near future. A Starbucks in Seattle, WA in a local trendy neighborhood dubbed the “Olive Way” is a testing ground for the latest of the company’s ideas and innovations. The outcome of this trial will greatly shape the future of the coffee house industry.
The Olive Way is adding to their coffee scenery and menu. The atmosphere will be revamped from the carbon copy of the franchise chain. The store will reopen with more earthly colors, an indoor fireplace and begin to sell beer from local brewers and wine from the Pacific Northwest’s vineyards. Also they will promote the new layout theme of “Coffee Theatre,” which the espresso machines will be situated in the middle of the space.
“It’s about time for a change. The atmosphere needed a change for the better. Just so long as nothing is too complicated, “ said Doris Terrell, a skeptic of the new ideas. The new layout will have smaller counters to promote more interactivity between the customer and the employees. Also the espresso machine will only brew one cup at a time in order to obtain a deeper flavor from the beans.
"It's going to feel very different," said Kris Engskov, Starbucks' regional vice president.
The store will be the only one in the Starbucks franchise in U.S. that will sell beer and wine. Olive Way’s menu will have much more to offer than the average Starbucks. The food choices will pair seamlessly with either coffee, beer, or wine. From a collegiate perspective Stephanie Montes , a student at the University of North Texas, said that the new beverage choices would be an upgrade to keep up with ever growing market. "These new drink options would make better business for Starbucks. They would be more expensive but it would be a better option for some that don't like the loud bar scene."Also she had said the addition of beer and wine would give more incentive for the more college and older market to buy the beverages.
Compared to other franchises testing their ideas with real customers, there is a probability of failure. There is no guarantee that every idea tested in the Olive Way will become practice for the rest of the chain. The company wouldn’t release when the new ideas would be implemented or even the budget of these trials. Regardless, the executives are optimistic of their chance of the alcohol sales in more stores in more urban neighborhoods.
This revamp is the effect of the recovery from hyper-expansion. Many stores and jobs were cut in order to restore balance back to the founder’s vision. Hugh Simpson, Executive Vice President of First Command Financial Planning said ,"This would be a mistake. This idea would only work if they used their own blends of beers and wines. Selling beers that are normally on tap would discredit the Starbucks franchise and its customer atmosphere."
Howard Schultz, founder of Starbucks, had a philosophy for his franchise. He had always viewed Starbucks as America’s Third place to be. The first being the home, second being church and the third being interchangeable for each country (Starbucks for the U.S., pubs for the U.K., etc.). Commercializing his vision was never intended to compromise the integrity of his ideas. Schultz fought hard against the addition of drive through windows because that would diminish the atmosphere of the Starbucks hangout.
“Give it a try. Companies nowadays are coming up with new innovations to keep up,” said Dick Terrell, retired business man. Luckily for the whole franchise, they are toning down the corporate image to return to their roots. The stores are also promoting local community involvement within the store itself, for example specialize the decor to fit the local flavor of that area. A Seattle shop uses an old bleacher from a nearby high school for shelving, and a New York City store's floors and counters are made of wood reclaimed from a century-old Pennsylvania barn.
"The key in the restaurant business is to differentiate themselves, and clearly they're making a move to do that," said Morningstar restaurant analyst R.J. Hottovy. "I think the idea of trying to localize the business, that's an aspect that will certainly work and help differentiate the brand and make it a lot less cookie-cutter than what you see in standard Starbucks."
The coffee market is very tough. Experimenting with the new menu and scenery diversity might just be the edge that Starbucks needs to oust its competitors like McDonalds and Dunkin' Donuts. Gourmet coffee shops still sold 53 percent of specialty coffee drinks like mochas and lattes last year, but that was down from 57 percent a year earlier, according to data from market research firm The NPD Group.
Starbucks planned to begin renovations in the Seattle store starting last Friday.