Perhaps he woke up one day and smelled his own coffee shops struggling in the weak economy. So, Starbucks Corp Chief Executive Howard Schultz is waking up to a fresh brew by percolating new business in the media world.

Starbucks has become the official naming sponsor of CNBC’s “Morning Joe” television show. The move is a throwback to the 1950s, when television programs were underwritten by manufacturers ranging from soap to cigarettes, and it comes as traditional advertising dollars are shrinking for publishers, television networks and other ad-reliant businesses. 

Schultz, who has made his own headlines over the years, also is an investor in TheWrap.com, a celebrity news blog based in Los Angeles, through Maveron, a venture capital firm he co-founded with Dan Levitan.

Maveron’s other investments include restaurant operators Pinkberry and Potbelly Sandwich Works as well as online names like eBay and drugstore.com.

(Photo: Reuters/Robert Sorbo)

Starbucks cafes in the United States are handing out a limited number of coupon books designed to drive its cafe customers to grocery stores where the coffee chain’s ice cream, bottled drinks and coffee beans are sold.

“We started in the coffee aisle. But the other aisles got jealous. So now, we’re all over the grocery store,” reads the little brown book of coupons, available now in company-operated stores.

The books include discounts like $1 off ice cream pints, $2 off bottled Frappuccino drinks or $1 off 10- or 12-ounce bags of coffee.

Licensed stores, such as those operated in grocery stores and book stores, will get the coupon books on Friday, Starbucks spokesman Alan Hilowitz said.

The company said its latest effort is an “evolution” of its long-standing efforts to promote cafe products in grocery stores, and vice versa.

For example, when the company launched its new daily brew Pike Place last year, grocery shoppers who bought a bag of the new blend got a coupon code at check-out that entitled them to a $5 Starbucks gift card.

Similar efforts are percolating overseas.  In Switzerland, Starbucks is giving away a voucher for a free espresso beverage with packages of coffee purchased in supermarkets. The promotion will travel to the United Kingdom, France and Germany later this year.

(Image courtesy of Starbucks)

Starbucks wants you to know that it is not the home of $4 coffee, and it’s launching a multimillion-dollar ad campaign to make sure you get the message that its brew is not an expensive luxury.

“Starbucks coffee does not cost $4,” Chief Executive Howard Schultz said this week when he announced the new ad blitz. The ad at left will run on Sunday in the New York Times.

In an email promoting its new campaign, Starbucks said: “Everybody is looking for value, but value doesn’t just mean what’s cheapest; it’s about what’s best for consumers, their families, their communities and the world around them.”

When the company was growing like gangbusters, it relied mostly on word of mouth advertising. ”But during that time … they became, kind of jokingly, the home of $4 beverages,” said William Blair & Co analyst Sharon Zackfia.

The reality is that most Starbucks rivals — with the exception of McDonald’s — have the same pricing, Zackfia said.

Starbucks drip coffee starts at around $1 and stays well below $4, while its specialty coffee drinks like mochas, lattes and Frappuccino blended drinks can top $4.

Chains like McDonald’s — which is wrapping up its U.S. buildout of in-restaurant McCafe counters –Quiznos and others have used Starbucks $4 coffee reputation to their advantage. 

Last year, McDonald’s operators in Seattle covered the city that gave rise to Stabucks with billboards reading “four bucks is dumb” and “large is the new grande.”

(Art courtesy of Starbucks, Quiznos)

Reuters checked out some of the stores that Starbucks is closing in California’s Inland Empire – an area well known for being a leader in home foreclosures.

Some of the coffee shop closures made sense, some didn’t and some had us wondering just what Starbucks was thinking.

This yet-to-be closed cafe, on the left, is in an upscale mall near a eerily quiet housing development — a no-brainer.

Another that is set to be closed is located in a busy, movie theater-anchored shopping center near a university. When we drove by, the store appeared busy.

An already closed cafe in a rundown neighborhood, shown below, was in a strip mall anchored by low-priced grocer Food 4 Less.

(Photos\Reuters)

Williams-Sonoma Home stores are a drag on profit for its parent company, but the San Francisco-based retailer is not giving up on it yet, even as it faces difficulty lowering some rents.
 
Williams-Sonoma Inc, which reported much better-than-expected quarterly earnings on Tuesday, said it is in discussions with landlords about potentially closing three underperforming Williams-Sonoma Home stores, which sell high-end items such as custom-upholstered sofas and formal china. But it is not yet at the point of discussing shutting down the 10-store chain completely.
 
“We’re really not at that point and it’s not something that we’re discussing at this point,” said Sharon McCollam, the retailer’s chief operating officer and chief financial officer.
 
“The focus in Home is profitability this year, not growth,” she said, adding that in the past the company had been pushing its namesake offshoot to grow, a strategy that would be difficult to continue in the recession, as consumers pare spending.
 
Like many retailers Williams-Sonoma leases its store space, and therefore faces obstacles when trying to close stores since mall operators may be loathe to have empty spaces. Yet Williams-Sonoma Chief Executive Howard Lester said there are not that many stores he would like to close even if he had the option.
 
“I would say that if we had our option, it would probably be somewhere around 5 percent of our stores today we would close, if we could,” he said on a conference call. 
 
That translates to roughly 31 stores, since the company ended 2008 with 627 Williams-Sonoma, Pottery Barn, Pottery Barn Kids, West Elm, Williams-Sonoma Home and outlet stores. 
 
“What we would rather do … is where we’ve had serious sales declines, like we’ve seen for the last year or so, and particularly since last fall, we would like to have rent reductions while we get through this,” Lester said. “I think that’s probably preferable to the landlords so that we can get through this period together, but leave the store there.”
 
That is often easier said than done. 
 
Simon Property Group, the largest U.S. mall owner and operator, said in January that it does not always grant retailers’ renegotiation requests.   
 
“Candidly, in many instances, we do not agree to give any kind of accommodation,” said Simon President and COO Rick Sokolov on a conference call in January. “These are not one-way negotiations. We’re going to be talking to them about what their prospects are, what rent they are willing to pay, are they willing to extend their terms.”
 
“There are a lot of other aspects of this, and happily we’re positioned … to be able to have these negotiations on a very even footing with the tenants,” he added.
 
For its part Williams-Sonoma said it is just continuing to push its case.
 
“I can’t say that it’s going as well as we’d like for it to,” Lester said. “With certain landlords we’ve had some real success and others are more difficult, but it continues.”
 
It’s not only Williams-Sonoma angling for a break on the rent.
 
Fast-food chain Quiznos said last week it has renegotiated more than 40 leases for its franchise owners, with an average reduction of 15 to 20 percent in lease payments, while other restaurant chains such as Starbucks and Rubio’s Restaurants said they are also negotiating leases.

(Photo: Reuters)

Starbucks is back in the ice cream case with new partner Unilever, the parent of brands like Ben & Jerry’s and Breyers.

Starbucks, which built its business selling $3 and $4 coffee drinks, is fighting to reignite growth in a tough recession and working to convince consumers that its products are a value and not a expensive indulgence.

Starbucks and Unilever say they tapped the talent from brands like Ben & Jerry’s and Breyers to reformulate the coffee chain’s ice cream, which is now packaged in pints that mimic the appearance of the well-known Starbucks coffee cups.

The new flavors hitting U.S. grocery store freezers now are Caramel Macchiato, Mocha Frappuccino, Java Chip Frappuccino and Coffee. The partners are also selling two flavors of milk chocolate-coated ice cream bars — Mocha and Coffee – at convenience stores.  

Ice cream pints sell for around $3.99 and the bars are priced at about $2.49.  Java Chip is also available in a single-serve cup for about $1.29.

The coffee chain changed partners last year, ending a collaboration with Dreyer’s Grand Ice Cream that produced flavors like Java Chip and Classic Coffee as well as Frappuccino-flavored ice cream bars.

(Photo\Starbucks)

We thought you might be interested in some comments from today’s chat with Starbucks CEO Howard Schultz. 
 
Schultz told Reuters he hopes to bring out decaffeinated Via instant coffee this year.  What was his drink of choice as he visited with us in Chicago?  Colombian Via, which made its debut on Tuesday.

He admitted that “people might trade down on a size or come less often as a result of the economy.”  But he says Starbucks is a place where people also seek refuge and a break. 

The company’s new $3.95 value breakfast pairings have gotten a lot of press attention of late, but the black horse may be its $25 loyalty card.  Schultz said almost 700,000 Starbucks Gold Cards have been purchased since Thanksgiving.  The card gives members 10 percent off most items at Starbucks and other perks — like free coupons to try new products such as its Tazo tea drinks.
 
For now, Starbucks is focused on selling its breakfast pairings and Via instant coffee.  While Starbucks has seen “a lot of demand” from grocery stores who want to sell Via, it is only in Seattle and Illinois for now, and not in grocery stores (though it will be sold at Costco, Target and Barnes & Noble). 

The CEO also let us in on a little factoid about Via, which Starbucks has been tinkering with for more than 15 years.  The inventor of Via created a liquid extract in the 1990s that was the centerpiece of the blended Frappuccino, he said. Getting to instant proved to be much harder.

Schultz also hinted that Frappuccino or iced coffee drinkers could find a new flavor in stores in time for summer, but declined to elaborate.

(Photo/Reuters)

Now that Starbucks is in the instant coffee business, will you mix up a cup?

CEO Howard Schultz wants to introduce Americans to Via — the company’s own instant brew — and he promises it is better than that jarred stuff your parents drink. It’s so good, he says, that it will help the slumping company grab a share of the $17 billion global instant coffee market now dominated by brands like Sanka and Nescafe.

“This is 100 percent arabica Starbucks coffee, the same exact coffee that goes into the 50 million cups we sell every week,” Howard Schultz told Reuters in an interview.

“The reason why instant has such a bad name is that it doesn’t taste very good. It’s not fresh coffee, it’s usually chemically treated,” said Schultz, who added that Via replicates the taste of Starbucks brewed coffee.

Before the product even hit shelves, critics were opining on Starbucksgossip.com.

BOSTON STARBUCKS REBEL said: “To the ‘instant-coffee consumer’ that is appears Howard is reaching out to, $1 a cup is way too expensive. To the ‘Starbuck’s Snobby Consumer’ instant coffee is a no-go. So who is going to buy this stuff? Roughly the same number of people who consistently buy freeze-dried entrees for their mountaineering adventures. The ‘Premium’ instant coffee market is anything but $17B.”

Will you seize the Via the next time you reach for a brew?

(Photos\Reuters)

Once upon a time, Starbucks had nowhere to go but up.

My, how times have changed.

Chief Executive Howard Schultz in July said the upscale coffee chain would not combine menu items and sell them at a discount, a move made popular by fast-food chains like McDonald’s.

“We’re not going to go down the fast-food lane,” Schultz told investors back then — when the company’s business was hitting the skids in a housing-led slowdown.

On the heels of news that McDonald’s will finish adding McCafes to U.S. stores by the middle of the year, Shultz is now touting a plan to offer several “breakfast pairings” at “attractive price points” beginning in March.

“The question of value often gets tied to the competition. How are we competing with (quick-service restaurants)? How can a premium brand be competitive when customers are trading down on everything from houses and travel to clothing and lunches out?” said Schultz. “We will combine our breakfast strengths with a value proposition that challenges misperceptions about our every day affordability.”

As it pays the price for its expansion exuberance, Starbucks is slashing another 300 namesake cafes around the world, bringing its closures to 1,000, cutting thousands of jobs and putting its brand new Gulfstream jet on the blocks. 

In the midst of it all,  Starbucks hopes to attract Seattle’s Best Coffee franchisees.

“We recently began exploring ways we could leverage Seattle’s Best Coffee brand to work for us, starting with a food service test in more than 2,800 Subway restaurants in the US beginning this month,” Starbucks Chief Executive Howard Schultz said. “I’m pleased to share with you today (that) we are expanding our franchising program with Seattle’s Best Coffee.”

Starbucks executives even suggested that Seattle’s Best franchisees could be good tenants for stores that will been vacated in the latest round of Starbucks closures, which bring the company’s total store closures to nearly 1,000.

Starbucks bought Seattle’s Best in 2003.

There are currently 12 Seattle’s Best franchisees who operate 36 cafes — some of which are located in Las Vegas casinos. Borders bookseller and grocery chain Albertsons are among the stores that house the more than 500 Seattle’s Best licensed cafes.

Uh, dude, you forgot something.

That was essentially the message from a California appeals court to a group of unsuccessful Starbucks applicants who sued the Seattle-based coffee chain over its job application, which they claimed asked an illegal question about marijuana convictions.

California law bars employers from asking job applicants to disclose marijuana convictions that are more than two years old, and Starbucks’ application asks for seven years’ worth of criminal history.

The spurned baristas contended they and the 135,000 others who didn’t make the cut were entitled to $200 each for filling out the tainted application.  Citing potential damages that could run as high as $26 million, the company tried and failed to have the case thrown out, then appealed.

While criticizing Starbucks for placing a disclaimer describing the California law on the back of its application in tiny type, the appeals court nevertheless made a critical finding that killed the case — none of the plaintiffs had marijuana-related convictions and two had never even smoked pot.

Oops.