Starbucks (NASDAQ: SBUX) has one of the most recognizable brands in the world, and its name is synonymous with coffee. So why would the beverage giant drop $100,000 to rebrand one of its stores – in its native city of Seattle no less – to experiment with a different sign, different coffee cups and even a different name?
That’s exactly what SBUX did almost two years ago in the Capitol Hill area of Seattle. According to the community website CapitolHillSeattle.com, in summer of 2009 a local Starbucks was converted into a shop that would be known as 15th Ave Coffee & Tea. It was pitched as an independent cafe “inspired” by the global coffee giant — yet on the corporate books, of course.
In a press release, Starbucks pitched the facility like this: “The store design is eclectic and raw, featuring locally sourced and reused materials. As a concept store, 15th Ave serves as a real-time, real-world exploratory environment for our designers.”
In short, it was a guinea pig for Starbucks coffee creations, branding and business operations. Starbucks apparently went at it with gusto, including a $100,000 makeover for the store to embrace the new look and feel and upgrade equipment.
But alas, 15th Ave Coffee & Tea was not meant to be. Not even two years later, Starbucks announced it is pulling the plug on the project and will return the store to its original corporate overlord branding. While some of the expensive décor will apparently stay, CHS.com talked to a Starbucks spokesperson who “confirmed that, yes, Frappuccino blenders will be added to the reclaimed wood and concrete interior.”
But that may not necessarily be a bad thing – at least for investors. There is a second indie-model Starbucks in Seattle in the area called Roy Street Coffee that will continue to operate as a testing lab for Starbucks. And reports indicate that while the 15th Ave experiment is over, some new menu creations and branding tips have been yielded from the store’s brief life in Capitol Hill.
That’s cause for shareholder celebration, considering that new drink offerings, expanded retail good lines and the launch of Starbucks’ Via instant coffee are the biggest driver of the company’s success over the last year or two. Since Via debuted in March 2009, SBUX stock is up a whopping +250%.
Besides, shareholders should remember that a $100,000 decorating bill is just a drop in the company’s very big coffee cup. The fact that the company continues to innovate and look beyond its core Starbucks brand is a good sign that leaders are focused on continued growth in 2011 – not resting on their laurels.
Jeff Reeves is editor of InvestorPlace.com. Follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.
