• Seattle Post-Intelligencer/Bloomberg News, Friday, February 15, 2008 12 PM

Starbucks is testing a 12-ounce cup of "fresh-pressed" coffee at $2.50 each in Seattle. The price is $2.25 in a Boston trial. Starbucks charges $1.55 for a regular brew.

The new drink, made in a machine that brews each cup individually, may become part of CEO Howard Schultz's plan to increase traffic in the more than 15,000 stores of the world's largest coffee chain. It would be priced just less than the lattes and cappuccinos that are now among Starbucks' most expensive drinks. A 12-ounce cup of those drinks costs $2.55. Starbucks in Seattle is also experimenting with a $1 refillable 8-ounce cup of coffee.

McDonald's and Dunkin' Brands have been stealing customers with less expensive drip and specialty coffee. "If they can create a better-tasting product and if they can get people to pay more for it, then you'd have the missing ingredient, which is pricing power," says Larry Miller, an analyst at RBC Capital Markets.

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