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Caffeine addicts take note: Starbucks’ high-end concept just got more serious

Dec 6, 2016

starbucks-200752-edited.jpegEarlier this month, Starbucks Chairman and CEO Howard Schultz dropped a bit of a bombshell.  He plans to give up the chief executive title in April to pursue other ventures, including heading the expansion of the upscale Starbucks Reserve Roastery. This new chain could total about 1,000 stores, with some fitting in existing Starbucks and others in their own separate locations.

What is Starbucks Reserve Roastery?

Starbucks opened its first Roastery in its hometown of Seattle in 2014. The store takes up 15,000 square feet and offers higher-end drinks than its traditional locations. Coffee is roasted on site, with beans sourced from around the world. The location also has meeting spaces and a coffee library.

The Roastery price points are higher as well. For example, you can spend up to $18 for a half pound of beans, more than double what you would pay at a standard Starbucks, and a cup of siphon-brewed coffee can set you back $8.

A larger Manhattan location is on tap for 2018, with stores in Tokyo and Shanghai set to open soon as well. Besides the flagship in Seattle, there are Reserve stations in current Starbucks locations in New York City, Boston, Chicago, Atlanta and Baltimore. That’s where most of the growth will come from.

Flagship roasteries as experiential retail

You could consider traditional Starbucks experiential retail, as customers can get meeting space and free wifi in addition to food and beverages, but the new roasteries are certainly upping the ante. Instead of trying to find a table in a crowded location, groups can rent a full-on conference room with catering. Some of the small-batch special blends are so limited that they might only last a few days in the store, creating urgency and a more unique product experience. The Seattle location even contains a high-end pizza joint operated by popular local chef Tom Douglas.

Locations limited to major cities, with potential for long-term growth

While many retail landlords would love a Reserve Roastery in their developments, these stores are currently only in major metro areas. The location in Seattle is in the popular Capitol Hill neighborhood, while New York’s first will be near Chelsea Market and High Line in the Meatpacking District. Similar locales will likely follow in other cities, but don’t expect to find one in any old shopping center. Though at 15,000 to 20,000 square feet, these stores could fill gaps from big-box store closings.

The fact that Schultz is heading up the Reserve concept signals that the company means business. After all, during his second stint as the company’s chief executive, he
increased Starbucks’ total value from $15 billion to $84 billion. It’s an interesting development, and certainly worth keeping an eye on.

Topics: Industry News

Ian Ritter

Written by Ian Ritter

Ian Ritter is a veteran commercial real estate writer. He worked several years as retail editor at GlobeSt.com and currently writes about the industry for several corporate clients and news organizations. He holds a Master's Degree from Columbia University's School of Journalism.

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