STARBUCKS
GOING GRAND, NOT SMALL
WHERE: SHANGHAI
Expansion of Reserve Roastery proves coffee can be an experience, not just a convenience. In December, Starbucks opened its second Reserve Roastery, in Shanghai. Customers took an immediate liking to it, spending sometimes hours in line simply to enter the store. Once inside, they spent an average of $29. At a coffee shop.
On its first day, the location became the highest-grossing Starbucks in the world, CEO Kevin Johnson said in January. During the location’s first eight weeks, the Roastery generated $64,000 a day—twice the sales a typical Starbucks generates in a week. “I have never seen anything remotely like what happened,” Starbucks founder and Executive Chairman Howard Schultz said. “We shattered every sales record in the history of the company.”
The Reserve Roastery is a major element in Starbucks’ growth plan, not simply because Starbucks considers China an important future market, but because it demonstrates the direction much of the restaurant business is going. Consumers have been shifting their spending in recent years, focusing more on convenience. But there’s an opposite trend, one in which consumers are looking for an experience.
In that sense, the Reserve Roastery fits the bill, taking a convenience-oriented concept—the coffee shop—and turning it on its head.
Starbucks designed the locations with experience in mind, while also giving the chain a place where it can try out new products and work on its food efforts. The company is using its Roastery concept to bolster the Princi Bakery brand, for instance.
The company is planning additional Roastery units in major markets, including Chicago and Milan.
The competitive nature of the restaurant business is forcing brands to think outside their molds to get customers in the door. Turning a coffee shop into more of a destination, with an atmosphere reminiscent of a craft brewery, is Starbucks’ response.
And with many retailers closing locations, real estate could be available for restaurants to experiment with their own destination shops.
$29: AVERAGE SPEND AT THE SHANGHAI RESERVE ROASTERY DURING ITS FIRST EIGHT WEEKS
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