Starbucks Puts Alcohol on the Menu in Portland

Could other chains follow suit to boost sales?

   

Starbucks Corp. (NASDAQ: SBUX) is expanding its offerings again.  But exactly into what may be the real question.

Customers looking for a little extra pick up me at Starbucks can now order up a shot of liquor, a glass of wine or mug of beer as the Seattle-based coffee giant introduces alcoholic beverages to its customers in Portland, Ore. SBUX also plans to sell beer and wine at an existing store in Issaquah, Wash. later this year.

Starbucks first began selling liquor last year at a few stores in Seattle, so that in itself is nothing new. But the new Portland store makes one wonder if Starbucks is looking to become something more than a coffee house; perhaps a full service eatery that can compete with a neighborhood Chipotle Mexican Grill Inc. (NYSE: CMG) and Darden Restaurants, Inc. (NYSE: DRI) subsidiary Olive Garden?

Although the Portland store features Starbucks trademark storefront, company executives say this store has been “localized” and decorated to fit the neighborhood. It also features a sit down menu, including pasta, cheeses and mini-dishes, while the wine and beer selections, such as Rouge, Widmer Brothers and Deschutes, were handpicked to fit in with the area’s culture.

With coffee prices, and everything else on the rise, perhaps Starbucks feels the need to expand its offerings to lure in a few extra customers. Maybe the coffee chain is trying to cater to a customer base that would rather not hang out in a bar. Or maybe it’s just being smart and trying to give its clientele a reason to linger longer.

If the Portland store is a prototype for a new breed of Starbucks, there’s no doubt that the company is venturing into an area that poses more competition and risks. Though the liquor could help improve margins, the breath of new menu offerings means new operating costs, regulation, and potentially a different client base that Starbucks may not want.

Whatever happens, given the push by many restaurant chains, including fast food king McDonald’s Corp. (NYSE: MCD), to copy Starbucks’ look or feel, I’m sure it is an experiment that many will be watching.

As of this writing, Cynthia Wilson did not own a position in any of the stocks named here.


Article printed from InvestorPlace Media, http://investorplace.com/2011/06/starbucks-sbux-nasdaq-alcohol-mcd-cmg-dri/.

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