• Reuters, Monday, April 5, 2010 8:24 AM

A new café in Seattle's Capitol Hill section -- home to a vibrant gay community, grunge rockers, hipsters and mansion dwellers alike -- is a far cry from the standard Starbucks that made the city famous as a coffee mecca (or was it vice-versa?). It features velvet curtains, indie movie nights, single-origin coffees, wine and beer, and organic and gourmet food, Lisa Baertlein reports.

But Roy Street Coffee & Tea is, in fact, owned by Starbucks -- an incarnation of management's idea to create "idea incubators." The 15th Avenue Coffee & Tea, also in Seattle, is another. "The Starbucks brand has shifted over time from being a specialty brand to being more of a mass brand," says Harvard Business School marketing professor John Quelch. "There is a gap at the top of the market."

One of Starbucks' major missions with the cafés is "to reinvent the store experience," according to Arthur Rubinfeld, president of Starbucks global development. The new formats could "re-energize" Starbucks' upmarket appeal, Quelch believes.

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