Starbucks Opening up to 1,000 Reserve Cafes in Bid to Go Upscaleby
Coffee chain had previously set a target of 500 locations
Customers demanding ‘upgraded experience,’ CEO Schultz says
Starbucks Corp. plans to open as many as 1,000 locations of a new upscale chain that will tout its premium Reserve coffees, escalating an effort to reach more sophisticated customers.
The world’s biggest coffee-shop operator had previously set a target of 500 globally for the Reserve chain, which hasn’t rolled out yet. The first location, scheduled to open next year, will sell more expensive small-lot coffee, along with food from Starbucks’ Italian bakery partner, Princi.
The push is part of a move by Starbucks to add different store concepts around the world. It’s also opening giant locations known as Roasteries, which offer tastings and spotlight its premium coffee and the roasting process. The company announced plans on Thursday to open its next Roastery in Tokyo, following a location in Seattle and planned sites in Shanghai and New York.
“The customer is going to demand an upgraded experience,” Chief Executive Officer Howard Schultz said in an interview. “We’re becoming much more bullish on what we believe the Reserve brand, in multiple forms, represents.”
Between the Roasteries, the smaller Reserve locations and its regular cafes, Starbucks is increasingly varying the look and experience of the 45-year-old chain. It also has been opening flagship stores around the world that spotlight local tastes, and it’s been adding upscale coffee bars to more of its standard locations.
A common theme is the desire to sell more of its Reserve premium brand, a product line that traces its origins to 2004. It was that year that Starbucks began offering a single-origin coffee as part of its Black Apron Exclusives. The program evolved into the Reserve brand in 2010. Starbucks opened its first Roastery & Tasting Room store in its hometown of Seattle in 2014 to showcase Reserve coffees. The new Roastery planned for Tokyo’s Nakameguro district will be its fourth such location.
In the Seattle Roastery, customers can get specialty drinks such as espresso-topped ice cream and sit at bars to watch beverages being made with French presses and Clover brewers. That location is 15,000 square feet (1,400 square meters), roughly nine times the size of an average Starbucks. The stores planned for Shanghai and New York will both be two levels.
Despite Starbucks’ increasing ambitions for the Reserve stores, they’ve taken time to get off the ground. The company has been discussing plans to open the stores since 2014. The rollout of the large Roastery locations also has been gradual: The New York location, for instance, won’t open until 2018.
Upgrading the brand may allow Starbucks to better compete with regional and local coffee chains that tout coffee origins, locally made pastries and different brewing styles. Reserve coffees are typically produced in small batches and cost more than drinks made with traditional beans, which is helping pull in more sales.
“The Reserve stores will be a significantly higher average unit volume than the traditional Starbucks,” Schultz said, declining to give specific figures. “Our enthusiasm to accelerate our growth all things Reserve is indicative of what’s happening.”