Monday, 28 January 2008

Starbucks serving coffee at $1

Starbucks has confirmed reports it has started to sell a $1 (51 pence) cup of coffee in certain stores in Seattle as a trial. It is not definite that the cheap brew coffee will be added to the rest of its chains in the US or overseas.

However, its business has suffered from slowing consumer spending and competition from low-cost rivals. The news had first been reported in the Wall Street Journal, which also said the Seattle-based company was experimenting with giving free refills of some of its offerings.

"We are conducting a test in the Seattle area. However, this test is not indicative of any new business strategy," said Starbucks spokeswoman. The firm is trying to lift its sagging fortunes, which saw its shares fall by more than 40% last year.

Higher dairy and energy prices have seen the firm push up prices of its lattes and espressos. In addition, analysts warn the specialist coffee firm faces steep competition from fast-food chains, such as McDonald's, which is in the process of introducing its own line of gourmet coffee.

Starbucks sacked its chief executive, Jim Donald, at the beginning of the year and handed the reins back to its chairman and former chief executive, Howard Schultz, to steer a recovery effort. (source: BBC News)

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