Starbucks to Add Alcohol at More Cafes

By Leslie Patton - Jan 24, 2012 4:54 AM GMT+0700

Starbucks Corp. (SBUX), the world’s largest coffee-shop chain, will sell beer and wine at more locations to lure customers during the slower afternoon and evening hours.

The chain, which first served alcohol in October 2010 at a Seattle store, will sell beer and wine in as many as 25 locations by the end of this year, the Seattle-based company said in a statement today. Stores in Chicago, Atlanta and Southern California are among the new locations, Starbucks said.

The specific stores have been “carefully selected” and are larger and have more seating than regular Starbucks sites, Clarice Turner, senior vice president of U.S. operations, said in an interview today. Starbucks also is selling fruit-and- cheese plates and focaccia with olive oil at the stores that serve alcohol, she said. The company isn’t considering the concept for the whole chain, Turner said.

“It won’t be at every Starbucks store ever,” she said.

At the six stores that now sell alcohol in Seattle and Portland, Oregon, beer is $5 and glasses of wine are $7 to $9. Starbucks is creating the bar menu “so it’s relevant to local taste preferences,” Turner said, declining to name specific brands that the stores will carry.

Starbucks fell 1.7 percent to $47.34 at the close in New York. The shares gained 43 percent last year.

‘Plenty of Business’

“They have plenty of business in the morning,” Sara Senatore, a New York-based analyst at Sanford C. Bernstein & Co. who rates the shares “outperform,” said in an interview. Starbucks isn’t making full use of its workers and real estate in the later part of the day, she said.

Other restaurants, such as Dunkin’ Brands Group Inc. (DNKN)’s Dunkin’ Donuts chain, have introduced non-breakfast foods to attract people after the morning hours. McDonald’s Corp. (MCD) sells coffee drinks, smoothies and McSnack wraps during its slower afternoon time.

Selling alcohol probably won’t hurt profit at Starbucks, Senatore said. Most alcoholic beverages have about a 75 percent margin, which is comparable to coffee drinks, she said.

There could be some additional expenses for bartenders, insurance and licensing, Senatore said.

“The incremental costs are really going to be about labor,” she said.

There are more than 10,700 Starbucks cafes in the U.S. and about 6,200 internationally.

To contact the reporter on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net