Starbucks Addresses the Price Issue, and Breakfast

SEATTLE — When Starbucks begins serving a new line of breakfasts early Tuesday morning, the coffee shop chain is hoping its egg sandwiches achieve more than just the perfect balance of smoky bacon and salty parmesan cheese.

Starbucks is also trying to pull off another balancing act: the meals must be inexpensive enough to draw in frugal customers, yet fancy enough to appeal to those who care more about quality than price.

The $3.95 breakfasts — coffee and an egg sandwich, cup of oatmeal or coffee cake — represent Starbucks’ latest effort to recast itself as an affordable brand. The value meals, which Starbucks calls “breakfast pairings,” save customers $1.20. As part of a broader effort to appeal to the value-conscious, Starbucks is also offering discount cards and training its employees to suggest bags of whole beans and instant coffee to people who are cutting back on $4 lattes.

About those lattes: the company is fed up with the characterization that it only sells $4 specialty drinks. “The $3.95 price point is a backhanded way to go at the four-buck perception — it’s less than four bucks, and it’s not just a drink, but food to go with it,” said Terry Davenport, Starbucks’s chief marketing officer.

Starbucks is adjusting the menus that hang in stores, too. Expensive specialty drinks like Frappuccinos used to be front and center, but new menus will highlight $2 brewed and iced coffees instead. It is teaching servers that the majority of drinks are under $3, so they can tell consumers who complain about pricing. http://www.nytimes.com/2009/03/03/business/03sbux.html