With coffee sales flat, Starbucks adds some fizz
Chain revamps menu, includes beer, wine, mobile ordering
Starbucks baristas: Make room for bartenders — and a carbonation station for teas and juices.
An evening menu of wine, beer and tapas, including flatbreads, olives, nuts and cheese, will be launched at the coffee chain’s locations in Toronto and other big cities by the end of the year, Starbucks Canada president Rossann Williams told the Star in her first sit-down interview since taking the helm nine months ago.
She said the company’s aim is to appeal to women, who make up 60 per cent of Starbucks’ customers and don’t necessarily like to hang out in bars with their friends. She says the idea has been a hit so far in big U.S. cities.
In fact, the world’s biggest coffee chain has a complete revamp planned for Canada in 2015, Williams said. She rifled off a list of innovations she has in store, from customized carbonated beverages this summer to new food offerings rolling out in Ontario and B.C. starting March 3.
Also watch this year for Starbucks delivery, lots more drive-thrus on Hwy. 401 and a mobile pay-and-order option that will let customers use an app to make purchases and bypass lineups when they pick them up.
With coffee sales flat, the 44-yearold java giant is pushing aggressively into different areas as it faces stiff competition from fast-food chains serving coffee along with independent coffee chains popping up everywhere.
Over the last year, McDonalds, which has enjoyed great success with its McCafé cup of joe, bumped Starbucks as the second-largest coffee player by market share in Canada after Tim Hortons, says market research firm NPD Group.
“We’re faced with a dilemma: do we want to be in the coffee business or in refreshments and food?” said Williams.
She said she expects food in particular to be a big driver of sales and traffic for the chain, which came to Canada in 1987. Two out of three customers who visit Starbucks now do not order anything with their hot and cold beverages, Williams noted.
While your favourite Grande and Venti coffee concoction will always be a big part of the Seattle-based company’s menu, Starbucks Canada is pushing higher quality, locally sourced food with the launch next month of a line of warm pastries called La Boulange.
“It’s a huge opportunity for Starbucks in Canada,” said French chef and La Boulange Bakery founder Pascal Rigo. He says food sales have jumped 15 per cent since Starbucks put his artisanal baked goods in U.S. locations two years ago.
He said his savoury items, including soups, grilled cheese, ham and cheese croissants and other sandwiches, will also likely be introduced here later this year.
“Millennial customers like quality,” said Williams, who said her aim is not only to keep the coffee behemoth’s loyal following but attract the next generation of coffee drinkers to hang out in its cafés — and buy more items.
“Our customers have given us a lot of feedback on what they want. They said they want innovation in beverages,” she said.
“We’re faced with a dilemma: do we want to be in the coffee business or in refreshments and food?”
ROSS ANN WILLIAMS
STARBUCKS CANADA
So Canadians will soon be able to get some fizz in their drinks on request with a carbonation option for their Teavana brand teas and fruit juices. Last summer, locations in the U.S. Sunbelt launched something similar with Fizzio soda drinks made by servers with a machine similar to the Soda-Stream.
Williams, who hails from Portland, Ore., said her biggest surprise since taking the reins in Canada last summer is that there’s lots of room for growth in Canada. The U.S. market is pretty much saturated with Starbucks locations, but Starbucks Canada is opening 100 stores a year over the next five years.
“People say there’s a Starbucks on every corner. But there isn’t here,” said Williams, who shook hands and introduced herself to customers and thanked staff at the location in the former Albert Britnell Book Shop, on Yonge St., just north of Bloor St.
She said she has also taken notice of the lack of her stores’ iconic green mermaid logo on highways to signify drive-thrus, compared to the other top chains. “We should be at every third exit on the 401.”
Delivery to customers in downtown Toronto and other big cities is also on her radar. It’s going to be tested this summer in the U.S. and she’ll bring it here this year “if we like what we see.”
While the recent Burger King takeover of Tim Hortons was definitely “very big” for Canadians, “we are no less bullish on the innovation we will bring” to Starbucks, Williams said.
Her chain also welcomes newer competition from indie coffee houses.
“We love it. People say Starbucks is the Walmart of coffee that’s going to put them out of business,” but its presence just raises the bar across the board, she said.
“We love being outside the box. You’re not going to talk to anyone who loves their job more. This is my dream job,” she said.
Starbucks Canada is also planning express walk-up stores with limited offerings and drive-thrus to be made from used shipping containers, as has been done in the U.S. since 2011. The idea is to keep used items in the Starbucks supply chain out of the waste stream, she said.
“They have to make big changes, just like Tim Hortons did six or seven years ago when it started expanding its food menu,” said Robert Carter, executive director of food service at NPD Group.
“Beer and wine is also a no-brainer for them. It’s a $100-million opportunity for Canadian restaurants, and it appeals to Starbucks’ core customer (women) because it’s not the bar scene,” said Carter.
He said with fast-food restaurant growth projected to slow down to 1 per cent over the next five years in Canada, there is “real room for Starbucks to steal customers” from Tims especially, which has a dominant 42per-cent market share in fast food.