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Starbucks (SBUX, news, msgs), the company that popularized the $4 cup of coffee, is testing a $1 cup and free refills of some of its offerings.
The Seattle coffee giant is experimenting with selling the $1 "short" brew in its hometown area, spokeswoman Valerie O'Neil confirmed.
The 8-ounce short size isn't on Starbucks' menu but has long been ordered by in-the-know patrons. Typically, a short brewed coffee would sell for about $1.50, although that can vary by several cents depending on the store.
Starbucks is also testing the offer of free refills for traditional brewed coffee in the Seattle area.
O'Neil wouldn't elaborate on the specifics of the tests or say how many stores are offering it. She said the tests aren't indicative of any new business strategy.
The $1 test undercuts even low-cost coffee purveyors, including McDonald's (MCD, news, msgs) and Dunkin' Donuts, whose coffees generally start in the low $1-plus range.
Although most sit-down restaurants top off customers' coffee free, specialty cafes have largely stayed away from the practice.
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The high cost of milk
Starbucks will face increasing competition this year from McDonald's, which plans to start adding a line of espresso drinks at its U.S. restaurants.Last year, Starbucks blamed a slowdown in customer traffic on pressures on consumer spending. The company has raised its prices in part to offset the high cost of milk, a move analysts say has eaten into sales.
Howard Schultz, who expanded Starbucks from a small Seattle chain into an empire, retook the chief executive's post this month.
This article was reported and written by Janet Adamy for The Wall Street Journal.
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