Starbucks testing $1 coffee, free refills-WSJ

NEW YORK Wed Jan 23, 2008 2:59am EST

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NEW YORK Jan 23 (Reuters) - Starbucks Corp (SBUX.O) is testing $1 coffees and free refills, The Wall Street Journal reported on Wednesday, as the global coffee chain faces increasing competition from fast-food rivals.

The report said Starbucks is experimenting with a "short" $1 cup as well as free refills for brewed coffee in its Seattle-area stores. Starbucks charges around $1.50 to $4.00 for a coffee, depending on size and flavour.

Starbucks was not immediately available for comment, but the report quoted the company's spokeswoman.

Shares in Starbucks have lost around half their value over the past year amid worries about U.S. consumer spending, over-expansion, and competition from fast-food rivals such as McDonald's Corp (MCD.N) who offer specialty coffees.

The report said that $1 undercut regular coffee prices at both McDonald's and Dunkin' Donuts, a unit of Dunkin' Brands Inc., which start in the low $1 range.

Starbucks announced a management reshuffle earlier this year, bringing Howard Schultz back into the chief executive position. It also said it would close underperforming U.S. outlets and speed up international growth.

Starbucks has around 15,000 stores around the world including over 10,000 in the United States. (Reporting by Ritsuko Ando; Editing by Louise Ireland)

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