Wine & Beer Served at Starbucks

Starbucks Corporation (SBUX - Analyst Report) has decided to sell beer and wine in 12 cafes in Southern California, Atlanta and in Chicago.

The stores will be remodeled and redecorated to match an evening mood. The wines served in these outlets will mirror the local flavor and will be hand made. Moreover, Starbucks revealed that they will offer evening snacks such as cheese plates and hot flatbreads to complement with the drinks.

Customers keep traffic plentiful in Starbucks cafés throughout the day, but the footfall abruptly declines during the evenings. This endeavor was aimed at increasing customer traffic after sunset.

Starbucks, a name which is synonymous with coffee, first started serving liquor in a store in the Seattle’s Capitol Hill neighborhood in October 2010. The stores are decorated with old chalkboards from Seattle’s Garfield High School, University of Washington, surplus store chairs and antique store baubles. In June 2011 it opened a new store in Portland where it served beer and wine after 2:00 pm.

The evening sales of the café outlets make double-digit contribution to the total sales of these stores. Moreover, the outlets provide a place for the customers to unwind themselves in a not-so-formal meeting over a glass of wine. Beer in the cafes cost around $5 per bottle and wine around $9 per bottle.

According to the Centers for Disease Control, about 17% of the US population indulges in spirits at least four times a month. Moreover, as per the coffee giant, the first serving of spirits at its store in Seattle was made on demand of its customers who wanted more options to relax in the evenings and afternoons.

Starbucks had made earlier attempts to lure its customers after work, when in 2004 it introduced a high-end chocolate drink called Chantico, but it did not turn out to be a success.

Other food biggies are also tapping the spirit market and luring their customers to unwind themselves in the evenings at their stores. Chipotle Mexican Grill Inc. (CMG - Analyst Report) sells beer and margaritas at many of its locations. This helps solidify its image as a fun restaurant.

Last summer, Sonic included beer and wine in the menu in its South Florida locations. Burger King opened Whopper Bars, serving beers in New York, Las Vegas, Miami and Kansas City.

However, Starbucks may not make all its customers happy by its decision. Many parents express concern that the surrounding of the cafes may be affected, and they also expressed concerns how the changes may affect many of their children, who do their homework in the coffee shops.

Currently, we prefer to be Neutral on Starbucks’ stock, long term. Starbucks holds a Zacks #2 Rank, which translates into a short-term Buy rating.

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