Starbucks Goes Into Stealth Mode

This week, Starbucks opened a remodeled café, and a key ingredient was missing. Not Caffe Verona Blend or Iced Grande Lattes, but the name — a name that may now be better known in the U.S. than any car company. Host Scott Simon talks with ad critic Barbara Lippert of AdWeek magazine about why the company is trying this new strategy.

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SCOTT SIMON, host:

You can still call it grande, but you can't call it Starbucks. This week, Starbucks opened a remodeled café, and a key ingredient was missing - not Café Verona blend or iced grande lattes, but the name - a name that may now be better known in the U.S. than any car company. There is no Starbucks name on the outside of what they now call 15th Avenue Coffee and Tea in Seattle. No green and white logo on the cups.

The store formerly known as Starbucks will give at least three of their stores in Seattle what they call a shot of community personality. It's not the only example of companies trying to downplay the brand names they've spent millions to advertise.

Barbara Lippert, ad critic for AdWeek magazine, joins us from New York. Thanks for being with us, Barbara.

Ms. BARBARA LIPPERT (AdWeek Magazine): Thank you, Scott.

SIMON: And what else are they doing at the 15th Avenue Coffee and Tea?

Ms. LIPPERT: Well, this really - I mean, I'm just scratching my head. I don't really understand it. I don't understand all the stealth and subterfuge, why they had to change everything. Apparently, all of these people went into this tiny, other local coffee house that was for real with, I don't know if they were wearing trench coats, but according to one report, they were holding folders that said observation.

SIMON: Well, these were…

Ms. LIPPERT: So there you have it in a nutshell.

SIMON: …these were Starbucks employees, yeah.

Ms. LIPPERT: Starbucks corporate people. So it's this huge corporate leviathan trying to act like it's all homey and neighborhood-y, and I don't think that's going to work. I mean, if that worked, if the little neighborhood coffee shops worked, why did Starbucks put them all out of business so easily? I mean, wasn't there an economy of scale going on for Starbucks?

And I'm not saying that Starbucks is the bad guy. I mean, it certainly has a place. They give their employees health insurance. If you're in an airport or a new city, it's a great place. I think all of the online dating services would be out of business without Starbucks.

But it just makes no sense to me that they would sort of, you know, have to create this new identity and kind of lie about it.

SIMON: Why would you project it makes some sense to them? What are they trying to do?

Ms. LIPPERT: Well, I think it makes some sense to them because it's more profitable for their real estate to be open at night. So that makes a lot of sense. You know, if the other Starbucks are closed after sundown, here they can serve liquor, they can have poetry slams or live music, but why can't they do that in the existing Starbucks and still call it Starbucks but Starbucks by night or something?

Why have a complete name change and a complete change of décor and everything else?

SIMON: Well, do they confront the fact that in certain markets, and I mean less a large geographical market like Seattle or Chicago or Los Angeles but in certain communities and ZIP codes, there's resentment towards chains.

Ms. LIPPERT: Right, there is resentment. So won't there be a resentment - it's like a fake blogger. Won't there be more resentment from something trying to be something it's not?

SIMON: Any other companies unbranding?

Ms. LIPPERT: Well, apparently Holiday Inn. See, all of these companies, Scott, I think here's the problem: They don't know whether they want to be the man or fight the man. You know, they fought all the way up there to get, you know, thousands of stores and billions of dollars in revenue, and now they want to undo that, and it's the same thing with Holiday Inn.

They think that people, you know, won't want to go to a Holiday Inn but they'll want to go to some sort of, you know, masked separate entity that's more boutique-y.

SIMON: Well, I do wonder this, in league with you, because I - it does seem to be, you don't, for example, check into a Holiday Inn looking for something quirky and charming but something reliable. And I don't know how many times I've been somewhere in the globe where I absolutely welcome the reliability of an American or Western chain hotel, and for that matter a Starbucks, and unapologetically so.

Ms. LIPPERT: Exactly. And so why not just work on what they have? Just make it better. People like it enough but they can make their food better, they can make it more nutritious, they could get their prices down. The same thing with Holiday Inn. They could make them cleaner, they could make them more pleasant.

People like the brand names enough. They have huge equity in these brand names. I don't know why they have to go into these little stealth categories.

SIMON: Are the Starbucks marketing people who are doing this - well, let me put it this way - and I am - I am a - I certainly am a Starbucks customer anywhere I go in the world - but do they think that people going into that coffee store are idiots?

(Soundbite of laughter)

Ms. LIPPERT: Well, you know, it's a great question, Scott, because this has been all over the Internet. It's a really, really exciting, kind of sexy story that everyone's picked up. And then the oddest thing is that one of the things that Starbucks does right in terms of marketing is that it's the number one brand name in the social media space.

Meaning it's the most tweeted, it's the most talked about on Facebook, etc., etc. So these people are really, you know, talking about it and tweeting it and studying it, and everybody will know.

SIMON: Well, Barbara, meet you over a grande, a latte sometime.

Ms. LIPPERT: A grande light beer maybe.

(Soundbite of laughter)

SIMON: Barbara Lippert, ad critic for AdWeek magazine, thanks so much.

Ms. LIPPERT: Thank you.

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Starbucks Shuns Name At New Cafe

15th Ave. Coffee and Tea in Seattle i i

hide caption15th Ave. Coffee & Tea in Seattle is a new cafe that Starbucks opened without branding it with the company's name or logo.

Wendy Kaufman/NPR
15th Ave. Coffee and Tea in Seattle

15th Ave. Coffee & Tea in Seattle is a new cafe that Starbucks opened without branding it with the company's name or logo.

Wendy Kaufman/NPR
15th Ave. Coffee and Tea interior i i

hide captionThe interior of a new cafe created by Starbucks bears little resemblance to the Starbucks that have cropped up across many towns and cities nationwide.

Wendy Kaufman/NPR
15th Ave. Coffee and Tea interior

The interior of a new cafe created by Starbucks bears little resemblance to the Starbucks that have cropped up across many towns and cities nationwide.

Wendy Kaufman/NPR

Before the recession, it came as no surprise to see new Starbucks locations cropping up all over the place with the familiar corporate name and logo plastered on everything from signs to coffee cups.

But the coffee giant opened a new kind of store Friday in Seattle's Capitol Hill neighborhood that has almost no trace of its link to Starbucks. Aside from the small print on the door that reads "inspired by Starbucks," there's little hint that 15th Ave. Coffee & Tea is owned by the worldwide chain.

For more than three decades Starbucks has been building a brand, spreading its name around the globe. Now the company is setting aside that corporate image as it tries to create a store with the vibe of an independent neighborhood cafe.

"We'll be handcrafting beverages, using French presses and traditional espresso machines," says D. Major Cohen, the cafe's project manager.

Customers can grab and go, or sit in this spare and sophisticated space that looks and feels more like a wine bar than a coffee shop. And the menu is also different, including wine and beer along with cheese platters and other fare.

The coffee beans will be of the Starbucks variety, but they will be roasted in smaller batches, which often provide better quality than those roasted in larger quantities.

The new concept is a "re-imagination" of Starbucks, Cohen says.

"Customers will be surprised. They are going to be shocked," he says. "We hope they come in and discover new things about Starbucks; and that they have a different perception of Starbucks, better I hope. But they will have a sense that we are presenting ourselves differently here."

Cohen brushes aside the suggestion that the new cafe exposes some of the weaknesses of the old. But even company CEO Howard Schultz has bemoaned that Starbucks had lost its soul. It's hard to retain it when you have more than 15,000 stores.

Many ideas for the new cafe came from within Starbucks. But for other ideas, Starbucks employees went on observation missions, visiting lots of local, independent cafes.

Sebastian Simsch, co-owner of Seattle Coffee Works, says Starbucks scouts visited on three separate occasions. While he was flattered, he wonders what exactly they were looking for.

"We are a coffee house. Coffee houses have been around for centuries," he says. "What are we doing that they can't figure out on their own?"

The addition of alcoholic beverages and entertainment in the new cafe allows Starbucks to maximize its real estate, says brand consultant Scott Bedbury, the founder of Brandstream. By providing food and entertainment at night, the cafe will draw in customers when it would otherwise be empty, he says.

Bedbury, who worked at Starbucks for many years, likes the 15th Ave. concept for another reason. Starbucks, he says, expanded too far and too fast. Now, if it wants to grow it will have to move in a different direction.

"Every brand has a stretch point. I call it the Spandex rule: You can only push so far, so wide and so fast," he says. "If companies want to grow, they have to create a second brand or even a third."

What do consumers think of the new cafe so far? Neighborhood resident Penny Lane says she likes the sophisticated, urban style. But Eric Fleish, who was visiting from Boston says, "It's insidious for Starbucks to masquerade — to trick the people who are specifically boycotting Starbucks into going into their place anyway."

For now, at least, Starbucks only plans to expand the new concept with two additional cafes in Seattle.

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