The Herald Bulletin

Morning Update

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October 23, 2013

Starbucks unveils 'tea bar' in New York City

NEW YORK — Starbucks is opening a new cafe in New York City, and it won't serve any coffee.

The Seattle-based company on Thursday plans to open its first Teavana "tea bar," where people can order specialty drinks and small dishes in a trendy, cafe-like setting. The sweets, flatbreads, salads and other food range in price from about $3 to $15. Drinks range in price from $3 to $6, and include novelties such as carbonated teas.

The menu of food and freshly made drinks is a change for Teavana, a chain of about 300 shops that sell boxed and loose tea and accessories. Teavana stores are mainly in shopping malls, but Starbucks CEO Howard Schultz said he plans to expand the footprint to include more locations in urban areas. Already, it has opened traditional Teavana shops in New York City.

Starbucks also plans to transform additional Teavana stores to make them more like Starbucks cafes and the tea bar that's opening Thursday.

The opening of the New York City tea bar comes after Starbucks bought Teavana last year. The company has said it plans to use the acquisition to make tea a bigger part of American culture, as it has with coffee.

Starbucks Corp., which has about 12,000 U.S. locations, has been on a strong financial run even in the weak economy, boosting its profits by raising prices, revamping food offerings and adding items such as pricey bottled juices. In its latest quarter, it said sales rose 9 percent at cafes open at least a year.

At a media event at the new Teavana store, Schultz said executives noticed that tea orders were among the fastest-growing drinks at Starbucks cafes. People are also more likely to order food when they buy iced tea.

Schultz said he expects the average purchase at the Teavana shop to be higher than at a Starbucks cafe, although it probably won't get as many customers. The store is also expected to do more business throughout the day, compared with the early morning rush at Starbucks stores.

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