Starbucks Tests No-Name Store Serving Booze

The local coffeehouse won't have the Starbucks name but will have wine and beer.

July 17, 2009, 12:40 PM

July 17, 2009— -- Starbucks customers in Seattle may soon be able to order a glass or merlot along with their grande latte.

But don't call it a "grande latte." In fact don't call it Starbucks.

The Seattle-based company is testing out a new concept in its hometown: coffeehouses that also serve beer and wine and host live music and book and poetry readings. You know, like what a local coffeehouse used to look like -- before Starbucks

These retro cafes will also drop the Starbucks name completely. No logo. No sign. Just a neighborhood-inspired name that will appear also on bags of Starbucks coffee sold at the stores, though the bags will reportedly contain the same coffee as traditional Starbucks, according to the Seattle Times.

The first store, which will open next week in a Starbucks once slated for closing, will be called 15th Avenue Coffee and Tea, after its neighborhood. Two other concept stores might soon follow.

Representatives from Starbucks did not immediately return calls seeking comment.

Most of the customers at the cafes would have to be from the area, said Erwin Ephron, a partner of Ephron, Papazian & Ephron, a consultancy to advertisers and the media industry. But there is a risk associated with abandoning the well known Starbucks brand.

"The benefit of the Starbucks name is that you know what it is, even if you are not from that part of town," Ephron said. "We'll see what happens."

Even without the reference to the Starbucks, Ephron said he wondered if they are really "giving that up."

People will still know it is a Starbucks," he said. "There are all sorts of clues. And it may make it more intriguing to people."

Ephron said there is a backlash against the Starbucks name these days, as many Americans pinched by the recession scoff at the notion of paying for premium coffee products .

"Price. Price. Price," he said. "I mean, we're in a recession. They have been nailed right and left if not by name -- and often by name -- 'why are you spending $4 for a cup of coffee?' That has resonance with people. That's something you can give up fairly easily."

Starbucks New Concept May Stay Local

So is the retro-fashioned Starbucks coming to a neighborhood near you?

Greg Schroeder, an analyst with Wisco Research, doesn't expect the company to expand the idea beyond these few concept stores.

Starbucks founder and CEO Howard Schultz is an entrepreneur, Schroeder said, who has tried many things.

"A lot of things haven't worked in the past and he's moved on," Schroeder said. "I really probably wouldn't make more of this than it's just a market test. I think the chances of this actually coming to something larger than what it is is probably very small."

But if it works, he said, Starbucks could leverage the company's retail skills, name and massive real estate interests.

In the past year, Starbucks has announced the closing of more than 900 stores, laying off thousands of workers in the process. Throughout this recession, consumers have not been able to justify the high cost of the company's coffee, while other chains have tried to steal away business with their own high-quality beverages. Given the downturn, the company has closed many lower-performing stores.

"They're facing a situation where they are pretty fairly saturated. Shareholders are looking for opportunities for this company to grow," Schroeder said. "It's very difficult to do that in the United States, particularly when McDonald's and other players in the quick-service restaurant space are starting to add premium coffee and espresso-based drinks to their coffee line."

And yes people will still associate it with Starbucks whether it's called 15th Avenue Coffee and Tea or something else, Schroeder said.

"There will be an association with Starbucks," he said, "despite a different name on the concept, particularly when the media associates it to Starbucks."

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