SEATTLE -- Starbucks Corp., the company that popularized the $4 cup of coffee, is testing a $1 cup and free refills of some of its offerings, reported The Wall Street Journal. The chain is experimenting with selling the $1 "short" cup in the Seattle area, spokesperson Valerie O'Neil confirmed for the newspaper.
The 8-oz. short size is not on Starbucks's menu, but has long been ordered by in-the-know patrons, said the report. Typically, a short, brewed coffee would sell for around $1.50, although that can vary by several cents depending on the store. Starbucks is also testing the offer [image-nocss] of free refills for traditional-brewed coffee in the Seattle area.
O'Neil would not elaborate on the specifics of the tests or say how many stores are offering it. She said the tests are not indicative of any new business strategy.
The $1 price point undercuts even low-cost coffee purveyors, including McDonald's and Dunkin' Donuts, whose coffees generally start in the low $1-plus range. Although most sit-down restaurants top off customers' coffee free of charge, specialty cafes have largely stayed away from the practice. Starbucks will face increasing competition this year from McDonald's, which plans to start adding a line of espresso drinks at its U.S. restaurants.
Last year, Starbucks blamed a slowdown in customer traffic on pressures on consumer spending. The company has raised its prices in part to offset the high cost of milk, a move analysts say has eaten into sales, said the Journal.
Howard Schultz, who expanded Starbucks from a small Seattle chain into an empire, retook the CEO post this month.
Seattle-based Starbucks has approximately 15,000 stores around the world including more than 10,000 in the United States.
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