Originally published Tuesday, November 13, 2012
By Melissa Allison
For the foreseeable future, when Seattle’s Best Coffee opens a new store, it will be a drive-thru. This is the first one on Fourth Avenue South in the Sodo neighborhood.
Unlike at so many Northwest drive-thrus, though, the baristas won’t be in bikinis.
The first drive-thru, slightly larger than 523 square feet, debuts Wednesday just off the sidewalk in front of SoDo Gateway Shopping Center at 2990 Fourth Ave. S.
The chain expects to open thousands of little red stores from which baristas will dispense brewed coffee, sweet flavored lattes, handheld pies and breakfast sandwiches that resemble Egg McMuffins.
If all goes according to plan, the tiny cafes will be situated mostly in empty suburban spaces, such as corners of Best Buy parking lots — affordable real estate that can be leased from a handful of corporate chains rather than lots of different landlords.
The stores will be owned by franchisees who can afford multiple locations, with launch costs at the low end of Seattle’s Best’s current startup range of $265,000 for a kiosk to $442,000 for a full cafe.
Seattle’s Best is aiming for busy customers who do not have time to noodle whether they want one shot of espresso or two. They barely have time to swing by a cafe, and often pick up their brew while getting gas or breakfast at a fast-food drive-thru, said Jim McDermet, who runs the chain for Starbucks.
“A lot of people out there don’t have cafe lifestyles,” he said. “There are people working two jobs or going to school at night, and coffee helps get them through the day, but they’ve had to choose coffee that’s not really good.”
McDermet said there was some question whether Seattle’s Best should even have its own retail presence. Most of its stores disappeared during the past few years, along with the Borders Books locations that housed them; it has only about 100 cafes left.
“We wouldn’t bother (with cafes) if we were going to re-create what Starbucks does,” McDermet said.
Seattle’s Best was founded in the late ’60s, shortly before Starbucks started, but it mostly languished after Starbucks bought it in 2003. Then a companywide shake-up sparked by the recession revived Seattle’s Best, which in recent years has gone where Starbucks would not.
The drive-thru strategy clearly is not a Starbucks play. In fact, like much of what Seattle’s Best has done in recent years, it violates multiple tenets dear to the parent ship.
•Seattle’s Best Coffee is served in tens of thousands of Subway, Burger King and Chevron convenience-store locations. Starbucks CEO Howard Schultz, by contrast, has often said Starbucks is not a fast-food company, and his chain rejected an advance from McDonald’s years ago when the fast-food chain was getting into fancy coffee.
•In recent years, Seattle’s Best began numbering its grocery offerings one through five to make its choices easy to understand for customers upgrading from Folgers. Starbucks’ coffees have names like Caffe Verona and Organic Yukon Blend.
•Seattle’s Best is big into coffee vending machines; Starbucks uses them in other countries, but not the United States.
•Seattle’s Best uses the franchise system and plans to continue with the concept. Starbucks never franchises; it sometimes licenses to grocery stores, airport vendors and others.
•In contrast to Seattle’s Best’s new strategy, Starbucks has few drive-thru-only locations.
Still, Darren Tristano, executive vice president of the Chicago food-industry research firm Technomic, said he was surprised at first by Seattle’s Best’s drive-thru-only strategy.
“Now that I see the brand and what they’re trying to accomplish, it makes sense,” he said.
Tristano lives near the Seattle’s Best test store where for the past eight months the chain has operated a cafe with seating and a drive-thru, and has tested various menu items.
“The seats aren’t bolted to the floor, but overall it’s not done in a way to invite people in,” he said. The new drive-thrus will not have any seating.
Tristano described the new concept, which includes a $2.79 combo of oatmeal and any size coffee, as “a little north of Dunkin’ (Donuts) and south of Starbucks.”
In price, it resembles McDonald’s, where oatmeal is $2 and coffee is $1.
The new Seattle’s Best menu includes food for people who need to grab a meal as well as coffee. It has handheld fruit and savory pies (stuffed, for example, with spicy macaroni and cheese), sandwiches made with pretzel bread, and English muffin and biscuit egg sandwiches.
The brewed coffee comes in original, dark, decaf and iced.
Seattle’s Best intentionally does not call out the specific roast numbers it will use for original and dark, because they might vary across markets — possibly lighter on the East Coast and darker in the Northwest.
The drive-thrus will begin rolling out next year, but the company would not disclose where it intends to open first. It also does not say how quickly it will reach thousands of locations, but officials said the plan is to move quickly.
Seattle’s Best also hopes to launch an urban concept that might be walk-up versions of the drive-thrus.
Even if Seattle’s Best’s little cafes eventually outnumber Starbucks’ 11,000 stores in the U.S., its revenues will be smaller, Tristano said.
“It’s like Subway and McDonald’s,” he said. Although McDonald’s has only 14,000 U.S. locations compared with Subway’s 25,000, its annual sales per location are about $2.5 million compared with Subway’s $400,000.
Just as Subway is not likely to catch McDonald’s, he said, “it would take a very, very long time” for Seattle’s Best drive-thrus to best Starbucks.