Starbucks on 15th Ave in Seattle

If You Can't Beat 'Em, Join 'Em

Starbucks new stab at innovation is a foray into the world of old European style coffee houses. With their opening of 15th Ave's Coffee and Tea in Seattle, Starbucks veers away from the corporate brand it has been establishing over the past few years, and focuses on replicating the atmosphere of an independent neighborhood café.

The layout of 15th Ave in Seattle is sophisticated, the decor expensive, and the coffee handcrafted by traditional manual espresso machines. Is this an attempt for Starbucks to regain its soul? Critics say Starbucks expanded too quickly over the past decade, and to continue growing will need to pursue innovative moves such as this one.

Still Putting the Little Guy Out Of Business?

But what will happen to the local neighboring coffee shops, such as Seattle Coffee Works, which started being subject to visits by Starbucks scouts that came tromping in carrying folders labeled observation? According to reports, the scouts would take notes, ask questions, and then leave, without purchasing anything. A cold, corporate approach compared to the atmosphere they're trying to build on 15th Ave.

New Hours for Starbucks

Starbucks is adding alcoholic beverages to its menu and providing entertainment into the night, allowing it to draw customers beyond its normal business hours. It also offers Artisan baked breads, gelato, and affogato, among other things.

Is Starbucks Playing Mind Tricks?

Neighborhood residents have expressed both positive and negative reviews on the new 15th Ave. Coffee and Tea store. The one criticism that stands out from the rest is that Starbucks is masquerading as the little guy, in a cloak and dagger move that may be digging its own hole. Unless you look for it, you'll be hard pressed to find a Starbucks logo in the coffee shop. This attempt to masquerade as a local neighborhood coffee shop, and not a corporate Starbucks, could be construed as a way for Starbucks to attract customers that normally would boycott the big chain in favor of the little guys. Surely deceiving your customers is not the way to gain their trust and build your new reputation.

What Do You Think? Is the New Starbucks a Buy?

Starbucks stock price has been hammered over the past several months, and recently made a little run. But where does it go from here? Does this innovative move strike you as ingenious or disingenuous? Does it make you want to buy, sell, or short Starbucks?

Can a corporate powerhouse really be successful creating an authentic neighborhood coffeehouse experience, that is normally fueled by one or two people's passion and dedication? Only time will tell.

Meanwhile, when we're on 15th Ave. in Seattle, we most likely will not get our mocha at the Starbucks in disguise, but rather go to one of the small neighborhood coffee shops, knowing that blood sweat and tears went into their products and services, and not a massive marketing and innovation budget.

As for Starbucks as an investment decision? While we'll still stop at the ubiquitous coffee chain to get our tall soy no whip mochas when on the road, we're not sure we're ready to put our money where our mouth is at this point - in either direction. Stay tuned for an investment recommendation as our analysis takes a more concrete direction.