HARRIS TEETER BREWING UP STARBUCKS COFFEE BARS

ROSEANNE HARPER

CHARLOTTE, N.C. -- Harris Teeter here has teamed up with Starbucks Coffee Co. to run coffee bars in a number of its units.

Since October, the supermarket chain has replaced five of its own coffee bar operations with Starbucks. Three are inside stores here; one is in a Raleigh-Durham store, and another is in a Greensboro unit. At least one more is set for another Harris Teeter during the first quarter of this year, said Yves Mizrahi, vice president of store development at Seattle-based Starbucks.

Starbucks approached Harris Teeter when it pinpointed North Carolina as the target of a major marketing effort, Mizrahi said. Harris Teeter was receptive, particularly because the addition of Starbucks in some of its market areas is just what customers wanted, said Ruth Kinzey, spokeswoman for the 135-unit Harris Teeter.

"We're delighted with this partnership because it permits us to offer a quality product that our customers have requested. The name-recognition factor most certainly plays a role in the marketing of coffee bars," Kinzey said.

The demographics in many of Harris Teeter's locations match up with demographics that have spelled success for Starbucks in other parts of the country, Mizrahi said.

Neither Kinzey nor Mizrahi would comment specifically on sales at the Starbucks coffee bars at Harris Teeter.

Kinzey, however, said, "The concept of placing a Starbucks in these select sites was well received by our customers. Consequently, we anticipate a very successful partnership in these particular locations."

Harris Teeter currently has coffee bars in 22 locations in different market areas, including the five now operated by Starbucks under a sublease agreement. The first Harris Teeter-run coffee bar was launched at a store here in 1993, according to Kinzey.

Kinzey said the partnership with Starbucks will continue. Some Starbucks operations will replace Harris Teeter's own programs and others may be added to units that have not had a coffee bar previously, she said.

"There are several factors that determine where we offer coffee bars. Even in the locations where we do, the size and type of coffee bar varies. That's because we customize our stores to reflect the tastes and needs of the individual community," she added.

The five Starbucks locations inside Harris Teeter units at this time either have seating of their own or share seating already in the store. All also are at the front of the store.

"Some of the seating is at the window line; some is between us and another element of the store. These operations function, act and feel just like a regular retail [freestanding] Starbucks," Mizrahi said.

All coffee bars offer whole bean coffee as well as a full menu of espresso-based drinks, a drip coffee of the day and a selection of non-coffee-based beverages.

At the Starbucks in the Morrocroft Harris Teeter here, shift supervisor Monty Borror said volume is about the same as at a freestanding Starbucks, but with more takeout sales at the in-store location.

"Mornings are the heaviest, just as they are at our freestanding stores. Lunch is pretty steady, but the next rush of business is between 4:30 and 5:30 in the evening and then again right before we close," Borror said.

At this location the regular drip coffee of the day is the best seller, selling for $1.23 with tax for a 12-ounce cup. The next best-selling drink is a mocha, at $2.51 for a 12-ounce cup. A mocha is a latte (espresso and steamed milk) with mocha syrup and whipped cream. Starbucks has freestanding stores in the same general area as the locations inside Harris Teeter units.

"But there's no conflict at all," Mizrahi said. He added that Starbucks will confer with Harris Teeter when the company contemplates opening a freestanding store in a market area with a Harris Teeter unit.

Starbucks, with 1,000 locations across the United States, currently has 40 coffee bars inside supermarkets, including QFC and Haggen in the Northwest, Dominick's in Chicago, Randalls/Tom Thumb in Texas, Publix in some Atlanta stores and one Star Market unit in Boston.

The most recently launched Starbucks inside a supermarket was in a Randalls store in Houston in December, Mizrahi said.

Since it was established in 1971, Starbucks, with its roster of trendy espresso-based drinks, has nearly become a household word in some parts of the country.

"We serve a wide variety of people, but the demographics we look for is the 25 to 45 age group with middle to upper income. And it does add to our success when there's a college campus nearby," Mizrahi said.

With the exception of airport locations licensed to Marriott Corp., Starbucks operations are company-owned, not franchise.