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Starbucks wants to give java a whole new vibe

Starbucks (SBUX) CEO Howard Schultz, who proved the naysayers wrong when they questioned whether consumers would spend their hard-earned money on "expensive" coffee, is upping the ante. He's now betting that they'll go for even fancier caffeinated beverages in a new type of megastore.

Called The Starbucks Reserve Roastery and Tasting Room, it's different in many respects from a typical Starbucks. It's certainly much larger. The first Roastery in Seattle, which opened in 2014, occupies 15,000 square feet. And now Schultz is planning a second, 20,000-square foot, location in New York City's trendy Chelsea neighborhood in Manhattan. It's expected to debut in 2018.

A typical Starbucks takes up between 1,700 square feet and 2,700 square feet. The Chelsea store will be designed by New York City architect Rafael Vinoly with an eye toward encouraging customers to learn more about coffee from Starbucks roasters and baristas.

Don't expect the usual Starbucks atmosphere and products at a Roastery, which "offers a different experience," according to spokesperson, who added: "The menu is dedicated to highlighting Starbucks Reserve coffees from around the world, all roasted within the walls of the Roastery. Everything a customer experiences at the Roastery from small-batch roasting, to single-cup brewing and coffee education, reflects the handcrafted nature of these coffees."

What's behind Starbucks price increases?

That means you'll pay more, too. Prices for Roastery drinks are much higher than what Starbucks typically charges because of those small-batch premium blends. For instance, a cup of Roastery coffee can cost between $4 and $7, well above the $2.45 Starbucks price for one of its Venti (large) cups of freshly brewed coffee. Consumers, though, haven't balked at the premium prices.

According to Schultz, the first Reserve Roastery is a huge hit. During the company's latest earnings conference call, the CEO said the Seattle location is performing "well ahead of original expectations." He didn't divulge additional details.

The ebullient billionaire, however, wasn't shy about describing the experience that customers get from its new concept, which took two years to develop.

"Our Seattle Roastery experience created something that had never been done before, transforming a retail environment into something far beyond just a coffee shop and into the single best retail experience of any kind," he said in a press release. "In New York, we want to take elements from what we originally created and build something even bigger and bolder, celebrating coffee and craft in a completely unique and differentiated way. We want this experience to tell our customers that we're coming to Broadway."

Starbucks plans to open another Roastery in Asia whose location hasn't been announced.

This story was updated to correct Starbucks' plan for future Roastery expansion.

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