Starbucks to Sell Alcohol in Stores

The coffee chain is going to add beer and wine sales to thousands of stores across the United States.

Mar 22, 2014 at 7:41AM

Starbucks (NASDAQ:SBUX) wants to perk you up in the morning and get you drunk later in the day.

While the company did not explain it quite that way, Starbucks does plan to greatly expand the number of stores selling wine and beer in the United States. 

Starbucks experiments with booze

Starbucks started selling alcohol in Seattle stores in 2010 and expanded testing to 25 locations in Los Angeles, Chicago, and Atlanta in 2012, according to Time.com. . Now the company sells alcohol in around 40 of its 11,500 U.S. stores. Those sales have apparently been going well. Starbucks COO Troy Alstead told Bloomberg Businessweek that there are plans to bring beer and wine sales to thousands of U.S. stores.  

"We've tested it long enough in enough markets -- this is a program that works," he told Businessweek. "As we bring the evening program to stores, there's a meaningful increase in sales during that time of the day."

The roll-out, Alstead said, will take several years and isn't expected to hit every store in the country. The company plans to focus on urban and other growth areas first.

Starbucks needs help at night

Like its competitor Dunkin Donuts (NASDAQ:DNKN), Starbucks is always searching for ways to get its morning customers to come back in the afternoon. One of its regular tactics has been the "treat receipt." This program lets customers who buy a beverage in the morning buy another in the afternoon at a significant discount.

This year the company also rolled out a "sweet receipt" promotion that offers morning customers a pastry for $1 after 2 p.m. as long as they bring in their morning receipt.

Pastry is an important part of Starbucks efforts to get customers into its stores at times other than the morning. 

When the chain shelled out $100 million for bakery La Boulange  in 2012, CEO Howard Schultz explained to investors that "what La Boulange is providing us well beyond the morning pastries and the lunch is a significant platform to go after need states and day parts well into the future," Quartz reported.

In 2010 when Starbucks first began selling alcohol at a Seattle location, USA Today reported that the company's coffee shops made more than 70% of their sales before 2 p.m. Even if those numbers have improved with the treat receipt program and the expanded pastry offering, the chain likely has huge capacity to grow its late afternoon and evening sales.

How big a market is evening for Starbucks?

Beer and wine -- which will likely be sold after 4 p.m. -- could certainly give customers a reason to stop by later in the day. The alcohol offerings will also be paired with food -- think flatbreads, chocolate fondue, and other shareable items that should not only bring customers in, but should increase the size of their check.

At Wednesday's annual shareholders meeting, Schultz noted that the typical Starbucks customer spends about $5 per visit, USA Today reported. "A glass of beer or wine can instantly double that figure."

Starbucks has huge growth goals

For Starbucks to achieve the growth goals Schultz spoke about on Wednesday, it's going to need to continue to innovate and be aggressive.

"We're still in the early stages of the growth and development of Starbucks, we're delivering record profits and revenue, sharing our success with our partners and heading toward a $100 billion market cap," Schultz told the crowd.

Alcohol sales -- if handled correctly -- should bring a massive increase in revenue to Starbucks stores located in the right places. The company must be careful however as alcohol -- even just beer and wine -- brings problems that coffee does not. It's rare, for example, for fights to break out in coffeehouses or for a coffee server to need to cut off a customer to prevent over-service. 

It's also important that no matter how tempting the added revenue is, Starbucks must fiercely protect its image and the brand's relationship with its customers.

That likely will not be a problem. Schultz has been so fiercely protective of the Starbucks brand that he changed how the company makes its breakfast sandwiches because the original way left the stores smelling of bacon, not coffee.

David Gardner first recommended Starbucks in February 2006, and those who followed his advice are very happy they did. David's proved time and again that he can find successful, disruptive companies, with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

Daniel Kline has no position in any stocks mentioned. He drinks a lot of coffee from Starbucks. The Motley Fool recommends Starbucks. The Motley Fool owns shares of Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers