Traverse City Record-Eagle

Business

October 24, 2013

Starbucks to open 'tea bar' in New York City

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NEW YORK (AP) — Starbucks is trying to make tea trendy, with plans to open its first "tea bar" in New York City.

The Seattle-based company says Teavana Fine Teas + Teavana Tea Bar will serve sweets and other food including flatbreads, salads and small plates ranging in price from about $3 to $15. Drink prices will range from $3 to $6, and include novelties such as a Spiced Mandarin Oolong tea and carbonated teas.

The menu of food and freshly made drinks is a switch for Teavana, a chain of about 300 stores that sell boxed and loose tea and accessories. Teavana stores are mainly in shopping malls, but Starbucks CEO Howard Schultz said he plans to expand the footprint to include more locations in urban areas. The company plans to add brewed tea and food to more Teavana stores.

The opening of the New York City store on Thursday comes after Starbucks bought Teavana last year. The company has said it plans to use the acquisition to make tea a bigger part of American culture, as it has with coffee.

Starbucks Corp., which has about 12,000 U.S. locations, has been on a strong financial run even in the weak economy, boosting its profits by raising prices, revamping food offerings and adding items such as pricey bottled juices. In its latest quarter, it said sales rose 9 percent at cafes open at least a year.

At a media event at the new Teavana store, Schultz said executives noticed that tea orders were among the fastest-growing drinks at Starbucks cafes. People are also more likely to order food when they buy iced tea.

Schultz said he expects the average purchase at the Teavana shop to be higher than at a Starbucks cafe, although it probably won't get as many customers. The store is also expected to do more business throughout the day, compared with the early morning rush at Starbucks stores.

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