Print

Email story

Comment

Email editor

Starbucks' cup overflowsHed news offlead

By ASSOCIATED PRESS
Published April 26, 2007

SEATTLE - With a growing crowd of millions lining up for its fancy coffee drinks in the 1990s, Starbucks Corp. was tantalized by seemingly endless opportunities to expand its brand, such as a chain of full-service restaurants, a hip tavern with coffee undertones and a literary magazine.

It didn't take long for those ventures to fall flat. And as the coffeehouse titan readies for long-term growth, some Starbucks watchers warn the company may again be stretching its all-important brand too far. Even chairman Howard Schultz frets that the efficiency improvements driving Starbucks' dominance have robbed stores of their authenticity.

Starbucks' leaders say they haven't forgotten the past. Reminders of their greatest misses are even scattered around global headquarters.

Starbucks has more than 13,000 locations around the globe, with a long-term goal of 40,000 stores, half of them outside the United States. The company had annual sales $7.8-billion in 2006 and is projecting 20 percent growth for this fiscal year. In some markets, the company is saturating densely populated areas with more stores so customers don't have to walk more than a few dozen yards for a caffeine fix.

The company's rapid growth almost single-handedly popularized upscale coffee in the United States, and its success has enticed McDonald's, Dunkin' Donuts and others to upgrade their coffee offerings.

But not everything Starbucks touches turns to gold.

In the '90s, the company experimented with several strategies for capitalizing on its hot brand, including a sit-down restaurant called Cafe Starbucks and a computer-friendly bar under the name Circadia. Starbucks also partnered with a few Web portals and pushed further into merchandise and media, including a periodical called Joe Magazine and a line of journals and desk supplies.

None of those ideas lasted. But that spasm of unsuccessful brand expansion shows that Starbucks can become overheated about the world outside of coffee, said John Moore, a former Starbucks marketer who heads the Brand Autopsy consulting firm.

"They're kind of caught in the position where I'd say they believe the hype," Moore said.

[Last modified April 25, 2007, 23:19:56]