Starbucks tests $1 coffee at some Seattle stores

— -- With free refills to boot.

Who'd a thunk? That's 7 cents less than the average price of the smallest cup of Premium Roast coffee at McDonald's.

Starbucks has never sold any coffee or non-coffee beverage for $1, spokeswoman Valerie O'Neil says.

So, why do it now? "We're always looking at ways to connect with the customer," she says.

"How ironic that the same company that convinced us that we could spend $2.50 on a cup of coffee is now saying, 'Hey, now you can spend $1,' " says Mary Chapman, editor of trade publication Chain Leader.

For that dollar, folks get not only a "short" cup of brewed coffee, but also a free refill. Also, any customer in the test stores who buys a larger "tall," "grande" or "venti" brewed coffee also receives a free refill, O'Neil says.

Starbucks officials declined to say how many Seattle stores are selling the $1 coffee. The chain has about 300 stores in the Seattle area. Until now, so-called short coffees at Starbucks have fetched $1.40 to $1.60. Short coffees at Starbucks are 8 ounces. The smallest Premium Roast size at McDonald's is 12 ounces.

Asked for his response to the price-cutting move by Starbucks, McDonald's spokesman William Whitman says, "McDonald's customers are always looking for great taste, convenience and value." With the expanded coffee options coming to McDonald's over the next year, he says, "They'll be able to get even more value."