Starbucks Lets It All Hang Out

About a year ago, Starbucks (Nasdaq: SBUX  ) went stealthy, opening new stores cloaked in non-Starbucks names, with decor intended to emulate indie cafes. While that plan seems to have fizzled, the company is trying another tactic: branching out from caffeine into alcohol.

According to The Seattle Times, Starbucks has canned plans to open a third undercover Starbucks. It will, however, remodel another popular Seattle Starbucks under its own brand name as a venue for live entertainment, selling wine and beer alongside its signature coffee.

Starbucks called its two incognito shops "learning labs," a part of its effort to remain fresh and relevant amid ongoing rivalry from McDonald's (NYSE: MCD  ) , Peet's (Nasdaq: PEET  ) , Green Mountain Coffee Roasters (Nasdaq: GMCR  ) , and Caribou (Nasdaq: CBOU  ) . Investors should welcome companies that try out new concepts -- as long as they don't anger their customers in the process. In that light, I found Starbucks' previous plan risky, since consumers don't like feeling duped.

Then again, this new venture could prove no less perilous. Offering booze definitely differentiates the company from its coffee rivals, and the expanded beverage selection could take excellent advantage of Starbucks' strong distribution network and customer traffic. But Starbucks' latest attempt to boost its late-day customer traffic strays beyond the coffee giant's core competency, and mixing caffeine and alcohol could lead to a truly hellacious bar brawl if patrons get too rowdy. The company has no plans to offer beer and wine at any other Starbucks locations thus far.

Even if it's adding stronger stuff than espresso to its roster of drinks, I'm glad to see Starbucks staying proud to be Starbucks. Share your thoughts on the java giant's about-face -- or its decision to serve an altogether different kind of brew -- in the comments box below.

Green Mountain Coffee Roasters is a Motley Fool Rule Breakers pick. Starbucks is a Motley Fool Stock Advisor choice. Try any of our Foolish newsletters today, free for 30 days.

Alyce Lomax owns shares of Starbucks. The Fool has a disclosure policy.


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