Starbucks mulls question of where to expand

The signage on a branch of Starbucks Coffee in London, England.

Starbucks told investors today that it's going to open at least 1,500 new cafes in the U.S. over the next five years. Executives at the investors' meeting admitted that the growth of new stores in the past was "undisciplined." Many stores cannibalized each other. Some had to be closed. But a Starbucks spokesman told me his time, they’ll follow their customers -- not just build new cafes willy-nilly.

“Food service chains are looking for traffic,” says IHS economist Sara Johnson. "So they want to be on heavily traveled streets. Places where people can conveniently stop.”

Starbucks is planning more drive-thrus and grocery store kiosks. The idea is, if you make it that convenient, you’ll get impulse buys from people who normally wouldn’t spring for an expensive cup of joe.

Ken Perkins is president of Retail Metrics. He says it works. In fact, he gets sucked into a kiosk for Starbucks-rival Dunkin' Donuts every time he goes grocery shopping.

“And there’s always a line, so it’s not just me!” he says.

Retailers are also invading college campuses. Starbucks says it’ll follow that trend, too, although it may have a harder sell with the hipster crowd. I meet 23-year-old Julian Flamant strolling down K Street in downtown Washington.

“They have to be careful of where they go because they’re not very hip," says Flamant. "They're kind of corporate.”

Flamant is holding a cup of coffee. It’s not from Starbucks. He avoids Starbucks if he can. But, he’s always ready for a jolt of caffeine, and if there were a Starbucks in his grocery store, he’d belly right up to the coffee bar -- hip or not.

About the author

Nancy Marshall-Genzer is a senior reporter for Marketplace based in Washington, D.C. covering daily news.

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