Starbucks Evenings: A New Day in Coffee Shops?

Wine and Beer Service May Spark a New Retail Real Estate Trend

Will the 40 million customers who start their weekdays at Starbucks want to return post- 4 p.m. for wine, beer and tapas-style small plates? After four years of testing in selected U.S. cities, the coffee powerhouse is betting they will. Starbucks COO Troy Alstead announced that some 30 stores are now offering the expanded menu with 10 more expected by year end. Driven by the need to boost traffic in the slowest part of its day, Starbucks is planning for an eventual 1,000 hybrid bar-coffee shops in major markets. Currently 70 percent of the chain’s sales occur before 2 p.m.

“The Third Place Concept” Signals an Emerging Retail Real Estate Trend

Marketed as “Starbucks Evenings,” the expanded menu and beverage service is designed to create a “third place” in the days of the chain’s youthful, upscale demo, the other two “places” being home and work. The concept capitalizes on Starbuck’s brand image as a gathering place with quality beverages. Customers can expect a mellow environment where they can unwind and enjoy premium wines and beers with friends before heading on to their evening’s activities. With its Evenings concept, Starbucks is entering a niche, successfully pioneered by independent hybrid cafés in dozens of urban centers but adding to that its brand muscle and customer base.

Starbucks Evenings are offered by selected stores in metro Seattle, Portland, Chicago, Atlanta, Los Angeles and Washington, D.C. Several are housed in shopping centers, such as Roswell Marketplace (Atlanta), Seacliff Village (Huntington Beach, CA), Creekside Village (Calabasas, CA) and Streets of Woodfield (Schaumburg, IL). The Starbucks in Dulles International and LAX offer the program as well. Wine and beer offerings are tailored to the tastes of the individual market, while the food menu is standardized. Orders are placed in the usual Starbucks manner at the counter where the barista-produced coffee and tea service will continue.

New Starbucks Service Could Pose Questions for Retail Commercial Real Estate

Some skeptics say the expanded menu will weaken the Starbucks coffee-based brand and possibly alienate customers who don’t like a bar atmosphere. Given both the extensive testing and the careful selection of markets, those predictions seem unlikely to be realized. But challenges may be posed in leasing retail space to Starbucks stores in shopping centers. What will be the reaction of other tenants with liquor licenses? How will prospective restaurant tenants react to the presence of a Starbucks? Will existing Starbucks’ leases require revisiting to allow for potential liabilities regarding alcohol? While none of these are insurmountable, they’re worth considering.

 Will Other Coffee Chains Follow Starbucks’ Lead?

Levin will be keeping an eye on the effects of the Starbucks expansion. We recently signed a new 3,160-square-foot lease for Dunkin’ Donuts in our Clifton Plaza (NJ) center.  With its Baskin-Robbins merger, the franchise-heavy Dunkin’ Donuts seems firmly focused on catering to America’s sweet tooth. Like Starbucks, they want to fill their low-volume time slots but it is doubtful that we will see Chardonnay mixing with donuts and desserts in the late afternoon at Dunkin’ Donuts. One of the chain’s major franchisees in Jacksonville, Fla., may be setting another trend in retail real estate with a store renovation, conducted in concert with the corporate office as a market test. The upgraded, free-standing venue on University Avenue offers state-of-the-art Wi-Fi and other tech services, conversation areas with sofas, a high-tech music system, and a conference room that has proved popular with local businesses and on weekends for family movie-nights.

Have you visited a Starbucks that offers the Evenings program? Or the Dunkin’ Donuts on University Avenue in Jacksonville? What was your impression? Please share it with us.