Something's Brewing

Changes are a-brewin' at Starbucks Coffee Co.-changes that could mean new challenges for independent coffee retailers. In an effort to satisfy customer demand, the Seattle-based coffee giant has introduced bigger locations in select markets.

Typical Starbucks locations provide 20 to 25 seats; flagship stores have 50 or more seats. In addition, says Arthur Rubinfeld of Starbucks, the larger locations feature expanded menus and the potential for live entertainment.

To date, Starbucks has five flagship stores: two in Washington state, two in New York City and one in Chicago. "Customer demand in each locale is so great that to properly service our customers, we need to provide more seating and additional service channels," explains Rubinfeld. "We're providing more of an experience in this retail segment than we do in our typical stores."

The experience may be a painful one for entrepreneurs, however. With Starbucks offering live music, food and other features independents have relied on to differentiate their coffeehouses from the giant coffee chains, smaller operators could find the competition getting hotter than a scalding latte.

This article was originally published in the January 1996 print edition of Entrepreneur with the headline: Something's Brewing.