Starbucks' $7 Reserve Coffees To Hit Twice As Many Stores

Starbucks (NASDAQ:SBUX) plans to bring its Starbucks Reserve coffees to 500 more stores by the end of 2014, doubling the total to 1,000, according to the Huffington Post.

The pricey brews cost an average of $2.65 a cup, about 40 percent higher than a regular tall at Starbucks, but the most expensive of the 40 varieties rings in at $7 a cup, making it easy to understand why Starbucks wants to see where else it can sell them. To soften the sticker shock, the chain is using words like "single origin," "handcrafted" and "hand-curated" so customers will know they're getting everything they pay for.

Part of the reason for Starbucks to expand the reach of the Reserve line is to take advantage of the artisanal coffee movement, which has created demand for more exotic coffees.

Another part may be more practical: With Dunkin' Donuts (NASDAQ:DNKN) now positioning itself as a coffee chain, Starbucks risks being squeezed between donuts from below and trendy indy coffee houses from above.

In practice, though, that may not be much of a squeeze. Starbucks feels like it's everywhere, even though it only has about twice as many stores as Dunkin', and it has balanced an upscale image (to distinguish itself from the low end) with in-store efficiency through its mobile-payment app (to differentiate from little indy coffee joints). The combination makes it the default coffee choice for businesspeople, and sets up the more expensive Reserve line as a potential impress-the-client option.

And beyond that? A Starbucks spokesman told the Huffington Post that Starbucks might also push the artisanal coffees to fine dining restaurants. The chain's stores "will not be the only place you'll see [the coffees] in the future," he said.

For more:

- See this Huffington Post story
- See this Starbucks news release

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