Raleys to partner with Starbucks

[ninersdd]

Raleys announced today that they will now have Starbucks in some of their locations. Looks like they will convert Incline Village and Natomas soon(and also Gold River). The main Starbucks in Incline Village gets very crowded so it makes sense that they would want another one.

https://www.bizjournals.com/sacramento/ ... 2023-07-25

[BatteryMill]

Seems like Starbucks is at a whole ton of retail chains now.

[storewanderer]

Finally. Raleys should have signed with Starbucks 20 years ago.

This may be an extension of the arrangement Bashas has with Starbucks. Raleys probably got hit hard in the head seeing the unit level economics of the Starbucks kiosks that Bashas has vs. the various "off brand" or knockoff/"proudly brew" Peet's kiosks Raleys has been installing for years and clearly never making any profit from.

The only issue is with Starbucks Raleys will have to actually staff these kiosks with dedicated employees. Raleys coffee departments have historically been part of the bakery and staffed by bakery.

Maybe next Raleys will get Boar's Head lunchmeats into their stores. This is another thing Raleys was too proud to ever get despite having multiple opportunities in the past and always having excuses for why it wouldn't be profitable for them to work with Boar's Head since Boar's Head insists on training employees/doing orders and taking those tasks away from the store (at a cost built into the higher product cost). Raleys deli program is very lacking in the lunchmeat category compared to Safeway/Kroger due to the lack of Boar's Head product.

[ninersdd]

The Bel Air up the street from me just got a renovation last year, and currently serves Drink! from Incline Village, so I can't see them changing anytime soon(plus a Starbucks across the street). I could definitely see the Raley's a mile east changing to Starbucks(especially being in a fairly affluent area plus no Starbucks on the busy intersection)

[storewanderer]

The Bel Air up the street from me just got a renovation last year, and currently serves Drink! from Incline Village, so I can't see them changing anytime soon(plus a Starbucks across the street). I could definitely see the Raley's a mile east changing to Starbucks(especially being in a fairly affluent area plus no Starbucks on the busy intersection)

Not sure what to say about the Drink! arrangement but when your supposed partner (Raleys) is expanding the strength of the giant competitor Starbucks in Drink!'s hometown (Incline Village...)... I don't know.

Raley's needs to get a productive coffee program into its stores. They allocate too much space to these initiatives to not have a productive program. But they say they will keep having all of these other various coffee programs too and Starbucks is just an addition. If this is anything like what happened down at Ralphs, once they got in with Starbucks, and saw the unit level economics of Starbucks vs. Coffee Bean (and Coffee Bean is a good concept, and those kiosks had dedicated staff), it didn't take long for the Coffee Beans in Ralphs to disappear. Same thing happened with Kroger at Mariano's- Mariano's had a dedicated coffee format they had developed and it was quite good called Vero, it had traffic, but Kroger insisted on replacing a couple with Starbucks and traffic/profits increased drastically.

They have changed programs so many times over the years... or changed directions within the same program. Java City being switched for Peet's, but then most of the Peet's were not actual Peet's but "we proudly brew" units. The few Peet's that were actual Peet's were misrun and not staffed properly.

These Starbucks kiosks do not need many customers to break even. I always think Starbucks is saturating itself but they keep opening locations and I keep seeing customers at the locations...

[SamSpade]

People were pleased when Market Street (Texas) took on Starbucks instead of "we proudly brew Peet's" kiosks as well.

[storewanderer]

I really am not a fan of Starbucks and like to try other coffee concepts whenever possible. When executed properly I find other concepts to often provide a better product and better value than Starbucks.

But Starbucks has a great formula it can give to licensees. Consistency at the licensees has gotten better over the years and now they even do mobile ordering at many licensees.

In the case of Raleys due to their refusal to properly staff their coffee counters and expect their already barely staffed bakery to staff them, one concept after another has not worked. With Starbucks I don't think they'll be able to get away with that type of staffing model so I expect this to go better.

[Alpha8472]

It was around 2000 when Albertsons opened up a brand new store in Pleasant Hill, California with a Starbucks kiosk inside. At the time nobody in the San Francisco Bay Area had ever seen a Starbucks in a supermarket. Just 3 or 4 years later Safeway started adding Starbucks kiosks to practically every single Safeway store.

Then Longs Drugs added Seattle's Best Coffee kiosks to their stores. Borders Books also had Seattle's Best Coffee Cafes in their stores. Barnes and Noble had cafes that served Starbucks going back to at least the 90s.

Then CVS came along and bought Longs Drugs. The Seattle's Best cafes were closed down. People were saddened. Seattle's Best Coffee also served ice cream. It was like Long's Drugs wanted an ice cream bar to compete with Rite Aid 's Thrifty Ice Cream. Long's staffed the Seattle's Best Coffee with 3 employees. It was that popular.

The Starbucks kiosk at Albertsons also served several flavors of ice cream by the scoop.

Then Macy's in Walnut Creek, California added a huge Starbucks Cafe with lots of seating. Some other Macy's might have Starbucks cafes also. The Nordstrom next door has had a coffee Cafe going back to at least the 90s.

Ralphs at the time used to have Coffee Bean and Tea Leaf kiosks. What happened to that chain?

[storewanderer]

Albertsons got Starbucks in to replace an in house/generic coffee bar concept in the late 90's. Another story of not making any money... Their original concept had ice cream, so some of the early Starbucks kiosks in Albertsons continued to serve ice cream. The later kiosks Albertsons started to install in somewhat greater numbers in 2001-2003 did not have ice cream and were like the Safeway kiosks.

The Barnes & Noble and Macy's Starbucks units are "we proudly brew" so they are not actually serving full Starbucks menu and do not participate in the app, gift cards, mobile ordering, etc. The coffee drinks should taste the same as a typical Starbucks, they do get limited training from Starbucks reps. Their supply chain is different from a corporate or licensee Starbucks supply chain.

Coffee Bean & Tea Leaf is still around in SoCal. They went on a big refranchising kick and I'm not sure how many corporate locations are left. They still have some locations around Las Vegas (those were always franchise). They had an odd outlying unit in the Oklahoma City airport for about 10 years that was recently replaced by Starbucks when the contract ended; Delaware North is who brought in Coffee Bean there, maybe they had a relationship elsewhere.

Another one is Caribou- Hy Vee used to be really heavy with Caribou. It appeared to do okay. Caribou is very popular in the upper midwest where they are from; MN and the Dakotas, etc. So it made sense for Hy Vee to partner with them. But as time went on Hy Vee started to put some Starbucks units into new stores instead. Then Hy Vee even started to build freestanding drive through Starbucks units out at the perimeter of the lot next to their gas station/convenience stores (if you didn't know better you'd think these were corporate Starbucks since they aren't even in the store and also have a drive through).

Caribou is interesting; their standard product is quite bland in my opinion. I like their variety of iced teas. They are a good afternoon/evening coffee since they seem weaker. Peet's and Caribou had or have common ownership and some Caribous were converted to Peet's. That did not go well and most of those are long closed. Peet's is polar opposite of Caribou defaulting to a VERY strong product.

[bryceleinan]

Albertsons got Starbucks in to replace an in house/generic coffee bar concept in the late 90's. Another story of not making any money... Their original concept had ice cream, so some of the early Starbucks kiosks in Albertsons continued to serve ice cream. The later kiosks Albertsons started to install in somewhat greater numbers in 2001-2003 did not have ice cream and were like the Safeway kiosks.

The Barnes & Noble and Macy's Starbucks units are "we proudly brew" so they are not actually serving full Starbucks menu and do not participate in the app, gift cards, mobile ordering, etc. The coffee drinks should taste the same as a typical Starbucks, they do get limited training from Starbucks reps. Their supply chain is different from a corporate or licensee Starbucks supply chain.

Coffee Bean & Tea Leaf is still around in SoCal. They went on a big refranchising kick and I'm not sure how many corporate locations are left. They still have some locations around Las Vegas (those were always franchise). They had an odd outlying unit in the Oklahoma City airport for about 10 years that was recently replaced by Starbucks when the contract ended; Delaware North is who brought in Coffee Bean there, maybe they had a relationship elsewhere.

Another one is Caribou- Hy Vee used to be really heavy with Caribou. It appeared to do okay. Caribou is very popular in the upper midwest where they are from; MN and the Dakotas, etc. So it made sense for Hy Vee to partner with them. But as time went on Hy Vee started to put some Starbucks units into new stores instead. Then Hy Vee even started to build freestanding drive through Starbucks units out at the perimeter of the lot next to their gas station/convenience stores (if you didn't know better you'd think these were corporate Starbucks since they aren't even in the store and also have a drive through).

Caribou is interesting; their standard product is quite bland in my opinion. I like their variety of iced teas. They are a good afternoon/evening coffee since they seem weaker. Peet's and Caribou had or have common ownership and some Caribous were converted to Peet's. That did not go well and most of those are long closed. Peet's is polar opposite of Caribou defaulting to a VERY strong product.

Caribou is under the Panera umbrella now, and is expanding under the same franchisee (Manna) that has the Reno metro Paneras. They have Caribou rights in Michigan and other states. So, it will be interesting to see if they make a westward push into other chains.