If it's after 4pm, you can start getting your drink on at more Starbucks (NASDAQ:SBUX) locations. The leading premium coffeehouse chain dramatically expanded its Starbucks Evenings program on Tuesday, introducing beer, wine, and appetizers to some stores in select markets including Florida and New York.
Starbucks had been slow in its rollout since piloting the program five years ago at a single location on its home turf of Seattle. It broadened its reach early last year, offering glasses of Malbec, bacon-wrapped dates, and other after-hours essentials at a few more stores, announcing its goal to have a quarter of its locations on the program within five years. A good chunk of those stores embraced Starbucks Evenings earlier this week.
It's a smart move by most accounts; but let's take a look at the positives and the negatives behind this ambitious model-widening initiative.
Have you been to a Starbucks at night? It's not exactly dead, but it's not the same flurry of activity that you see in the morning when commuters need a caffeinated spark to start their day, or even the early afternoon when soccer dads, students, and freelancers converge for Frappuccinos and Wi-Fi.
There's a void after 4pm. No one at work suggests hitting up Starbucks at the end of the day, and the last thing that commuters need on the way home is more caffeine. There's a real opportunity for Starbucks to boost its comps by drumming up traffic during the slowest part of the day.
Starbucks Evenings customers are also likely spending a lot more than they do in the morning when the average check clocks in at roughly $5. The tab will run substantially higher for a customer on a second glass of Chardonnay to wash down the truffle mac and cheese, or artisan flatbread topped with artichoke and goat cheese.
The initial taste tests have been generally positive, but you won't find a sous chef or expanded kitchen the way you would at a traditionally foodie haunt. In other words, how good can the food really be when pitted against tapas joints popping up all over the country?
Then we get to the distinctiveness of its beer and wine offerings. Starbucks brags about going through 500 wines in curating the wine menu that would be the best fit for the concept, and it's offering up regional tweaks on the beer to make sure that it stays local. However, it's not as if a pour of a Villa Maria Sauvignon Blanc tastes any different than the wine bar down the street doing the same thing. Unlike coffee, where Starbucks has sourcing and brewing advantages over the competition -- or even last year's push into carbonated beverages, where the company had unique hand-crafted offerings -- a glass of wine or beer is essentially the same as it is everywhere else in terms of quality.
From drunk driving accidents to bar fights to regrettable hookups, there are some material risks in the consumption of inhibition-freeing alcohol. No, this isn't a moral compass rearing itself into this story. This is just a heads-up that Starbucks could come under fire the first time that rowdy customers get out of hand. Yes, this is a problem at every restaurant with a beer and wine license, but it's new territory for the otherwise wholesome Starbucks.
Starbucks Evenings may also scare away young families who were hoping to score a pre-dinner cookie for their kids, and flavored iced tea for the parents. The new menu might also blur the brand identity. Is this Starbucks, or TGI Starbucks?
At the end of the day, the positives still outweigh the negatives. The opportunities are more important than the threats. Starbucks is doing the right thing in expanding Starbucks Evenings, but always remember that there will be challenges.
Rick Munarriz has no position in any stocks mentioned. 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.