Starbucks Opening 1,000 Reserve Cafes in Bid to Go Upscale

Starbucks Corp. Chief Executive Howard Schultz on Thursday unveiled new growth plans for the chain's upscale Reserve brand as it fights off competition from super-premium coffee rivals like Blue Bottle and Intelligentsia.

Starbucks, which was instrumental in shifting U.S. consumers to higher-quality coffee and espresso-based drinks, will have Reserve coffee "bars" in up to 1,000 Starbucks cafes by the end of 2017 in a bid to one day dominate the so-called "third wave" coffee movement.

Most of those Starbucks Reserve bars will be in the United States, and a handful already have opened in New York City, Schultz said in an interview with Reuters.

Over time, Starbucks also expects to open as many as 1,000 cafes that exclusively sell Reserve coffees, Schultz said.

Starbucks opened its first Reserve coffee roastery and tasting room in Seattle in late 2014. That 15,000-square-foot facility, which Schultz has described as a "magical coffee ride," roasts limited-supply Reserve coffees that sell for up to $50 per 8-ounce package. Roastery baristas prepare coffee using a variety of uncommon methods, such as siphon brewing, which was popularized by Blue Bottle and other super-premium cafe operators.

Starbucks plans to open its second roastery in Shanghai in 2017. New York City and Tokyo will follow in 2018, Schultz said.

Blue Bottle, known for its exotic, micro-lot coffees, has shops in the San Francisco Bay Area, Los Angeles, New York and Tokyo. Its backers include Fidelity Management and Research Company, Instagram co-founder Kevin Systrom and Oscar-winning actor Jared Leto.

Peet's Coffee & Tea, which influenced and was briefly owned by Starbucks, in 2015 bought a majority stake in Intelligentsia. Peet's is now majority owned by JAB Holdings Co, a holding company controlled by Germany's billionaire Reimann family, which has been snapping up coffee companies.