Starbucks Corp will open the first store in its new Evolution Fresh juice bar chain on Monday, its biggest move outside coffee and one it hopes will boost the company’s position in the $50 billion health food sector.
The juice bar business is, however, fragmented and intensely competitive and some analysts say the Evolution Fresh shops could have lower margins than Starbucks’ coffee shops.
With Starbucks yet to detail how many juice bars it plans to open, the popularity of its first shop, located in Bellevue, Washington, an upscale city just east of Seattle, will be closely watched. It will sell fresh and bottled fruit and vegetable juices, smoothies and food, such as wraps, salads and soups.
The world’s biggest coffee chain bought Evolution Fresh for $30 million in cash in November and at the time, Starbucks chief executive Howard Schultz said successful independent juice bars have annual sales of well over $1 million per unit.
Analysts have said that is a bit less than an average US Starbucks cafe but more than a typical store for rival Jamba Inc, a publicly held juice and smoothie chain which has struggled in recent years after Starbucks and McDonald’s Corp introduced competing products.
The Evolution Fresh store opening comes just ahead of Starbucks’ annual shareholder meeting on Wednesday. Investors in Starbucks have seen their shares soar since it restructured by slashing costs and closing nearly 1,000 stores.