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Starbucks is making a big bet on plants

The coffee chain said the shift to plant-based products has been “dominant” and is testing a location with nothing but plant-based food.
starbucks plant based
Photo courtesy of Starbucks

Starbucks is getting serious about plants.

The Seattle-based coffee giant, which has added a growing menu of plant-based options in the past several months, is taking its strategy a step further, with a plant-based location. The test at the location has since concluded. 

To be specific, the company has a location in Seattle with a menu that is 100% plant-based, executives said last week. “We use that as sort of a test area when we innovate, create things here in our support center,” CEO Kevin Johnson said. “The No. 1 trend that I would highlight here is just the consumer shift and consumer preferences around plant-based.”

Starbucks, eager to sell more food items to go with its coffee and tea drinks, has been pushing further into food innovation in recent years—efforts that paid off last year, as “food attachment” drove average ticket growth of 19% in the last three months of 2020.

But it has more recently jumped with both feet onto the plant-based bandwagon after ceding some of the lead to its cross-country rival Dunkin’—which was the first chain to introduce a plant-based breakfast sandwich and then last year beat Starbucks to the punch on oat milk.

To be sure, Starbucks has had non-dairy options for years—it first added soy milk in 1997, added coconut milk in 2015 and almond milk the next year. The company began pushing more non-dairy drinks last year, such as Honey Almondmilk Flat White or the Honey Almondmilk Cold Brew.

Yet it then introduced the Impossible Breakfast Sandwich last year, making it the latest chain to add a sandwich with one of the major meat analogue companies, Impossible Foods and Beyond Meat.

Starbucks clearly believes that plant-based items are not only here to stay but are growing as a category. “Probably the most dominant shift in consumer behavior is this whole shift to plant-based,” Johnson said. “And that is a shift both in beverage and food.”

He noted the company’s introduction of alternative milk. But he also hinted that more plant-based menu items will be following the breakfast sandwich. “You’re seeing more and more plant-based proteins in our food menu,” Johnson said.

From a profitability standpoint, the plant-based items are “a little bit of a push,” CFO Patrick Grismer said, noting that though the supplies cost the company more, Starbucks charges customers a premium. Whether that changes over time will depend on the consumer.

“A lot of it will depend on how consumers increasingly migrate to those alternative milks, not just in our business, but broadly in a way that supports increased production,” Grismer said. That, he noted, would reduce cost. At that point the company could reevaluate the cost of such items but, he said, “our goal is to maintain, if not expand, our margins over time.”

UPDATE: This story has been updated to clarify that the test of plant-based items at the store in Seattle has concluded. 

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