A Bean of Its Own
Seattle's Best Coffee tries to brew up a niche in the shadow of Starbucks.
It’s tough to figure out your identity when your parent is known around the world for good taste, strong reputation and—for better or for worse—ubiquity.
Just ask the folks at Seattle’s Best Coffee.
“Seattle’s Best is trying to create its own brand in the shadow of the largest coffeehouse in the world,” says Darren Tristano, executive vice president of Chicago-based Technomic Inc. “It’s probably perceived as a stepchild.”
Nearly a decade after Seattle-based Starbucks Corp. scooped up its backyard brother and made it a “featured brand,” the coffee with the red logo and smooth taste is searching for its appropriate place in a world of QSRs, grocery stores and, of course, coffeehouses. The latest effort: drive-thru retail locations that aim to establish Seattle’s Best as more than simply a label and instead a retailer in its own right. It’s throwing all its beans at the wall and waiting to see what sticks.
In May 2010, Seattle’s Best unveiled a refreshed logo with a clean design, and a new slogan: “Great Coffee Everywhere.” Since then, the brand has amassed a presence in 50,000 locations, including 20,000 grocery and mass retail stores that sell beans and ready-to-drink coffee beverages. Placement in QSRs account for much of the rest of it: Burger King, Subway and some Taco Bell locations feature the brew on their menus, and the company operates 100 retail locations in the United States and Canada.
In February of this year, the brand made inroads into the convenience channel, partnering with San Ramon, Calif.-based Chevron Corp., where it’s now offered at Chevron’s 550 ExtraMile locations in California, Oregon and Washington.
And the company put a new stake in the ground by unveiling two drive-thru locations. The first, in the Chicago suburb of Northlake, Ill., opened in March; the second, a franchised location in Brooklyn, N.Y., debuted in June. Both are in high-traffic areas and offer what the company describes as a “commuter-centric concept menu,” including new coffee beverages and breakfast and lunch sandwiches. (See sidebar, left.)
According to Neil Stern, senior partner with retail analysts McMillanDoolittle LLP, Chicago, such a multifaceted strategy—bagged beans in stores, brewed coffee at QSRs and now stand-alone branded locations in populated centers—could have the unintended effect of confusing the consumer.
“The brand is both changing and expanding fairly rapidly,” Stern says. “So whereas the consumer has a very clear idea of what Starbucks is as a brand, positively or negatively, it’s a little harder to get your arms around Seattle’s Best. They’re doing a lot of things all at one time.”
When Starbucks purchased Seattle’s Best Coffee in 2003, many speculated about the role the brand would take within the Starbucks organization.
“They took a substantial competitor off the market to prevent them from being gobbled up by someone else—and brought into competition with them,” says Andrew Hetzel, coffee retail and roasting consultant and founder of CafeMakers LLC, Kamuela, Hawaii.
The purchase “gives [Starbucks] more flexibility to attract a different type of customer,” Hetzel says. That customer may be siphoned off from the likes of McDonald’s McCafé and Dunkin’ Donuts, who have done exceptionally well in the past five years with their coffee beverages.
Stern calls Seattle’s Best the “fighter brand” of the Starbucks organization, meaning it’s a brand Starbucks can use in place of the flagship brand.
“As successful and good as Starbucks is,” says Stern, “there are a lot of people who resonate with Dunkin’ and McDonald’s; it’s a simpler, lower-cost approach. That gives Starbucks portfolio options. As a fighter brand, [Seattle’s Best] can fight on price and give people an alternative without damaging the main Starbucks brand.” “It makes sense,” Tristano agrees. “As the owner of both brands, [Starbucks has] to have a way to differentiate the two. If you’re a Dunkin’ customer, you’re less likely to move up to Starbucks, but you’re more likely to move over to Seattle’s Best.”
The Dunkin’ and McDonald’s coffee customers have traditionally been lower-income consumers than those of Starbucks, Tristano says. That sentiment is played out during CSP’s visit to Seattle’s Best’s Northlake location, where an employee is overheard telling a customer, “I’m not an elite.”
But for the coffee drinker, choosing a brand may not be a question of image, but of price. “Seattle’s Best is priced 15% lower than Starbucks,” Tristano says. “For most consumers, that may not be enough.”
Over the Borders
One of the most prominent showcases for the Seattle’s Best name came through its partnership with doomed book retailer Borders. When that company shuttered its retail locations in 2010, Seattle’s Best lost 500 sites—and its image of being a close sibling to Starbucks.
“[Starbucks] had found a home for Seattle’s Best for a while and done pretty well with the brand in Borders,” Hetzel says. “That was their anchor for it. Then, poof: Borders went away, and they were left with this brand again, looking for a place to put it.”
The loss at least left a positive taste in consumers’ mouths. “It created a brand perception of the coffeehouse in the Borders,” Tristano says, even though the closings were “a kick in the butt.”
And now, the company’s partnership with tens of thousands of QSRs is not a question of brand image but of mass, according to Hetzel.
“I don’t know if it benefits Seattle’s Best brand as much as it adds volume to the company’s roasting facilities,” Hetzel says. “Whether or not it’s an off-brand, that’s certainly how Starbucks is treating it. …They want to sell coffee everywhere, and they recognize selling coffee everywhere under the Starbucks name is not necessarily the smartest thing for Starbucks’ brand itself.”
Thru and Thru
Expanding into drive-thrus is a definite move away from being a coffeehouse, or a “third place,” as Starbucks hopes consumers will think of its locations.
“Starbucks is designed for grazing and lingering,” Tristano says. “This [Seattle’s Best drive-thru] is more designed to be grab and go.”
Drive-thrus in general—for any retail brand—do affect the customer experience. It moves consumers away from the image of stopping in for a beverage and toward the idea of getting in and getting out, according to Stern.
“If you’re building a brand around people and experience and the ‘third place,’ the drive-thru goes against that,” he says. “It tends to be much more transactional and functional. That’s the challenge. Starbucks has been growing them, but that’s been their challenge: How do I get that wonderful barista experience when you’re talking to someone on the headset?
“With that said, there’s no question that convenience drives purchasing,” Stern continues. “Sixty-seven percent of McDonald’s business goes through the drive-thru. So from a business opportunity standpoint, a drive-thru is a huge component.”
And it could be a point of difference for the brand. “It seems like there’s an opportunity for Seattle’s Best to differentiate itself as faster, more convenient, which would tie into their fast-food brand image with QSRs,” Hetzel says. “Perhaps they can focus more on brewed coffee, which is easier and faster to serve in a drive-thru format than the customization of espresso-based products in a sit-down Starbucks location.”
While the company says it’s too early to reveal any numbers related to the performance of the Seattle’s Best drive-thru, it is “pleased” with the traffic of walk-in and drive-up customers at the Northlake location, says Jenny McCabe, director of communications for Seattle’s Best.
And as is typical when talking about coffee, it always comes back to the 500- pound bean in the room: the flagship Starbucks brand, and how it’s affected by Seattle’s Best.
“If you compare the two [brands] today, they’re similar, but Starbucks is moving up—they’re now offering beer and wine in some locations. The corporation is really trying to elevate the Starbucks brand,” Tristano says. “They’re moving Seattle’s Best more toward Dunkin’ Donuts and moving Starbucks toward more of a bakery-café. Seattle’s Best is more of a QSR for the mainstream.”
Lunch in the Red
A visit to a Seattle’s Best drive-thru location is very different from a trip to a Starbucks. For one, the stores are not designed to fill the “third place” role, as Starbucks aspires to do. Decked out in red, as opposed to the ubiquitous Starbucks green, it feels more like a diner, complete with red plastic chairs and white tables. But that’s kind of the point.
The “on-the-go consumer” is the target for these locations, according to Jenny McCabe, director of communications for Seattle’s Best.
“The purpose of the drive-thru is to accommodate the lifestyle of our consumers,” she says. “Our customers are constantly on the go, and they tell us that finding delicious coffee options that fit their busy lifestyles is tough.”
My colleague Samantha Oller and I stopped at the Northlake, Ill., location—a converted Starbucks—for lunch on a steamy day in July. While comfortable inside, it was not a place that encouraged us to linger. Pop music, not soothing coffeehouse tunes, piped out of the sound system. The site offers free Wi-Fi, but we had to hunt down the window cling—tucked in a corner of the glass entryway—that told us as much.
The location offered pastries (coffeecake, brownies) similar to what you’d find at Starbucks, although at a slightly lower price point. Ethos water, Horizon milk and Naked juices sat in a cooler in front of the pastries.
However, we opted for the store’s so-called “never before seen” food items. Both items we ordered would be easy to eat in a car. I had a hot sandwich of pretzel bread stuffed with turkey and provolone, served to me on a real plate. Evenly heated and tasty, it was a fine meal (especially for $3.89). Samantha chose the egg-and-cheese breakfast sandwich—served all day—on an English muffin ($2.99). She gave it a thumbs up but said it lacked the “artisan-type feel” of Starbucks products.
And finally, the most important part of our trip: the coffee. Samantha called her small iced vanilla latte ($2.99) “OK.” My medium decaf brewed coffee ($1.79) was serviceable, but not strong enough for my taste. Our two drinks got me two punches on a loyalty card: Buy 10 drinks, get any 11th drink free.
Interestingly, in a nod to the site’s comparison to Dunkin’ Donuts, the employee who took my order also added the hazelnut creamer I’d requested. Nowhere in sight was there a condiment bar to let me do it myself.