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Starbucks Testing $1 Cup of Coffee


By JANET ADAMY
WSJ

January 22, 2008

Starbucks Corp., the company that popularized the $4 cup of coffee, is testing a $1 cup of brew and free refills for drip coffee.

The Seattle coffee giant is experimenting with selling a so-called "short" size drip coffee for $1 in the Seattle area, Starbucks spokeswoman Valerie O'Neil confirmed. The short size is an 8 oz. cup that is not officially on the Starbucks menu but has long been ordered by in-the-know patrons who want small drinks. Typically, a short, brewed coffee would sell for around $1.50, though that can vary by several cents depending on the store. Starbucks is also testing offering free refills for traditional brewed coffee, also in the Seattle area.

Ms. O'Neil would not elaborate on the specifics of the tests or say how many locations in the Seattle area are doing it. She said the tests aren't indicative of any new business strategy.

Starbucks has said that pressures on consumer spending have slowed customer traffic at its stores. The company has raised its prices to offset higher ingredient costs, a move that analysts say has eaten into its sales.

The $1 test undercuts even low-cost coffee purveyors, including McDonald's Corp. and Dunkin' Donuts Inc., whose coffees generally start in the low $1 range. Although most sit-down restaurants top off customers' brewed coffee free of charge, specialty cafes have largely stayed away from it.

Write to Janet Adamy at janet.adamy@wsj.com

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