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Starbucks (NASDAQ: SBUX ) is bringing the magic back to coffee this month, through a new partnership with Disney (NYSE: DIS ) . The two iconic brands are set to open five new Starbucks coffee shops at Disney properties in the United States this year. The first of these new locations will open at Downtown Disney in Anaheim, Calif. Borrowing from Disney's playful imagination, the new location will feature an outdoor living-wall adorned with 1,000 plants in the shape of a coffee cup.
Disney is thirsty for more Starbucks
This isn't the first Disney destination to offer its guests Starbucks coffee. In fact, all of the Starbucks locations that are operated inside Disney parks today are actually licensee locations that are owned and operated by Disney. The difference with today's announcement is that Starbucks will own and operate the new location in Downtown Disney in Anaheim, California.
This creates a unique branding opportunity for the world's largest coffee retailer. Arthur Rubinfeld, who heads overseas global innovation for Starbucks, says, "This will be one of the most unique indoor-outdoor Starbucks stores in North America."
A 10-foot-tall video screen inside the restaurant and a first-of-its-kind interactive touch screen display will be a big part of the store's appeal. Moreover, the video installation will visually display the story of Starbucks -- thus creating a unique branding experience for Starbucks customers. On top of Starbucks' traditional menu, the new store will also feature exotic coffee blends from Starbucks Reserve java line of brews. Together, these elements should help Starbucks leave a lasting impression on its visitors.
In other Starbucks news, the coffee chain introduced four new breakfast sandwiches this month, with hopes of reinvigorating the morning crowd.
Rise and Starbucks
The java giant is fighting to hold on to its breakfast customers amid increased competition. While Starbucks currently generates as much as half of its sales from the morning crowds, rivals including Yum! Brands (NYSE: YUM ) are aggressively targeting the early a.m. customers.
Yum! Brands-owned Taco Bell said it will launch a nationwide rollout of its new breakfast products on March 27. The rollout, which will include the taco waffle and Taco Bell's A.M. crunchwrap, marks the largest menu expansion in the company's history. It also puts pressure on Starbucks to step up its own breakfast offerings. To keep stride with rivals such as Yum! Brands in the morning day-part, Starbucks introduced four new breakfast sandwiches: slow-roasted ham and Swiss on a croissant, vegetable and cheese on a ciabatta bun, egg and cheddar on multigrain toast, and a reduced-fat turkey bacon sandwich. Are you hungry yet?
Thanks to Starbucks' $100 million acquisition of bakery chain La Boulange in 2012, the coffee retailer is now able to innovate its food offerings faster than ever before. If Starbucks' new breakfast sandwiches are a hit, it could help the company grab a bigger slice of the $50 billion limited-service breakfast market. As it stands, McDonald's (NYSE: MCD ) commands more than 30% of that market, according to data from Technomic.
However, unseating McDonald's in the breakfast arena could prove challenging, particularly for Starbucks. That's because Starbucks' food and beverages cost more than similar items from McDonald's. The coffee joint's new ham and Swiss croissant and ciabatta with vegetables, for example, are priced at $4.45 apiece, according to Forbes. That's nearly double the cost of one of McDonald's breakfast sandwiches, not to mention items from Mickey D's dollar breakfast menu.
Ultimately, Taco Bell's new breakfast items are more comparable in price to McDonald's than Starbucks' offerings. This could make it more difficult for Starbucks to poach morning customers from its fast-food rivals than many would think. Nevertheless, Starbucks is offering guests a free grande brewed coffee with the purchase of any breakfast sandwich from March 12 through March 15.
There you have it -- the two things to watch at Starbucks this month. These aren't game-changing developments for the coffee company. However, opening its first Starbucks-owned stores inside Disney parks and expanding its breakfast menu to better-compete with fast-food rivals are two things that should drive domestic growth for Starbucks going forward. Shares of Starbucks are down 6% year to date and trade around $73 apiece today. Maybe these moves will give the stock a bit of a caffeine jolt.
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