Let’s Have a Dollar Cup of Coffee

Starbucks Corp. (Seattle) has announced it will begin selling 8-ounce cups of drip coffee for $1, with free refills.

The test will be conducted in many of its Seattle-area stores, though the retailer did not say how many stores are part of it, whether it’s considering a similar promotion for any other products or whether any new test markets are on the horizon.

A Starbucks spokeswoman said the test “is not indicative of any new business strategy.” Among its rivals in the suddenly heated-up coffee wars, McDonald’s sells a 12-ounce cup of premium roast for $1.07 and Dunkin’ Donuts sells a 10-ounce cup for $1.39. Starbucks’ normal price for the “short” cup had been $1.50.

“Testing is a way of life for us, as we are constantly looking for new ways to connect with the customer and provide the best Starbucks experience,” the spokeswoman said.

Last year, the company raised the average price of its coffee and other freshly made drinks in most of its U.S. stores by 9 cents, citing the rising cost of dairy products and other essentials. It was the second price hike in a year, following a 5-cent increase in October 2006.

Starbucks chairman Howard Schultz, who recently stepped back in as ceo after the company fired Jim Donald as part of efforts to revitalize the company, has cited the high price of some of its products as having contributed to an overall decline in the company’s business.