By Barbara Gray, CFA, Mar 22, 2012 – On Tuesday, my husband and I drove down to Seattle for a meeting so we decided to stop by Bellevue, Washington on our way home to check out Starbucks’ new Evolution Fresh concept store. Interestingly, the store is just down the road from the Chipotle we had visited last Spring when I was doing my due diligence on CMG. What struck me first about Evolution Fresh was the great ambience, high positive energy, and the organic feel of the place. The Smooth Blue was delicious (one of the better smoothies I have tasted!) and the Quinoa, Kale, & Butternut Squash Simmer was amazing – it tasted incredibly fresh and healthy – such a great combination of flavors and good-for-you ingredients. And the rest of the items on their menu look equally yummy and healthy…

I think Starbucks’ entry into the $50 billion health and wellness market through the launch of its new Evolution Fresh concept underlines how the higher empathy level of heart and soul companies allows them to recognize opportunities faster than their competitors. If you think about it, Starbucks has already won the hearts and minds of its customers (60 million people visit Starbucks every week!) and will be able to leverage the same employee culture, grassroots marketing strategy, and existing infrastructure of production sourcing, logistics, and management information systems. It is interesting as the couple sitting next to us (I heard the girl exclaim “this is my new favorite place!”) didn’t know that Starbucks was behind Evolution Fresh as there was no obvious Starbucks branding asides from the fact they offered Starbucks coffee. But in talking with the employees, we discovered that half came over from Starbucks, and Evolution Fresh is piggybacking off of the same free wifi (which I love!) system and customer card platform. There will be cross-marketing opportunities too as Starbucks’ plan is to replace the bottles of Naked Juice it currently buys from PepsiCo with its own Evolution Fresh line-up starting in its Washington stores this Spring. Interestingly, the guy that Starbucks bought Evolution Fresh from back in November for $30 million was Jimmy Rosenberg, who also founded Naked Juice which he sold to PepsiCo for an undisclosed sum back in 2006.

I am really excited to see how Starbucks will be able to use social media to leverage its existing strong relationships with its employees, customer, business partners, and communities to introduce and launch Evolution Fresh. The company’s success in using social media to launch new concepts is evidenced by its successful launch of VIA back in October 2009 when it had only 5 million fans on Facebook and 450,000 followers on Twitter to reach sales of $100 million in only 10 months. Starbucks’ current extensive social media reach of 40 million fans on Facebook, 2 million followers on Twitter, and nearly 100,000 followers on LinkedIn will prove to be a valuable asset as the company seeks to plant the seeds to raise awareness for its new concept and draw patrons into Evolution Fresh. The more conversational-style Twitter seems to be the platform of choice for Evolution Fresh as its newly created @EvolutionFresh Twitter account already has 605 followers but it has not yet launched its Facebook Page (although there is a Community Page with 1,494 likes) nor a separate LinkedIn Company account. Starbucks management will be able to use the customer feedback to really listen and engage with their customers which will allow them to make adjustments and improvements to their Evolution Fresh pilot store before they invest future time and capital to expand the concept. The company is engaged in grassroots listening as there was a table of health and wellness bloggers sitting next to us providing their feedback and views on the food and the store itself and one of Starbucks’ culinary experts who created the dishes was circulating around the store giving out samples (so tasty!) and actively engaging with customers.

I believe Evolution Fresh will be able to capitalize on the high level of social capital that Starbucks has built over the past 25 years through its authentic core values, caring culture, and social conscience. More importantly, Evolution Fresh will provide the company with a platform to raise awareness and educate its customers about nutrition and the benefits of healthy eating. I believe Evolution Fresh represents an exciting new chapter in the movement Howard Schultz started back in 1987 to “inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time”…

Disclosure: I have a LONG position in Starbucks Corporation (SBUX-NASDAQ) and Chipotle Mexican Grill, Inc. (CMG-NYSE).

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