Dive Brief:

• Sprouts Farmers Market is working with a local merchant to open a coffee bar in a Phoenix store, marking the first time the specialty grocery chain has struck such an agreement with an outside firm, the retailer announced earlier this month.
• Phoenix-based small-batch coffee roaster Press Coffee will own the in-store coffee bar, which Sprouts described as a pilot location.
• Sprouts is preparing to test the concept as the grocer moves ahead with plans to open at least 30 new locations during the coming year.

Dive Insight:

Sprouts expects the coffee bar to open at an unspecified point this fall inside its store at 3320 N. 7th Ave. in Phoenix, a company spokesperson said in an email. The bar, which will operate from 7 a.m. to 4 p.m. daily, will include a seating area and offer drinks including specialty drip and cold brew coffee, shakers, hot and iced tea and nitro bold brew. The bar will also sell whole and ground coffee beans.

Sprouts did not indicate how long it plans to operate the coffee bar before deciding if the pilot is a success, but the grocery chain suggested it is already considering expanding the concept. “Both companies believe this pilot will be well received and are looking forward to forging a partnership which could produce more locations,” the spokesperson said.

Press Coffee, which was founded in 2008, operates 12 stores in Tempe, Chandler, Scottsdale, Arizona, in addition to Phoenix. The company imports coffee from farmers around the world and roasts it at a facility in Phoenix.

The retailer’s announcement that it will experiment with dedicating space to a coffee bar comes as the grocer steps up its focus on a smaller, more efficient store format designed to improve its financial performance while building connections with shoppers. The new stores cost less to build than the company’s legacy locations but are designed to generate similar sales.

Sprouts has had difficulty generating sales growth in recent years, with its same-store sales lagging behind results at other grocers, especially traditional chains that offer a greater variety of products to shoppers.The company recorded same-store sales growth of 2% during the second quarter, an improvement compared with the 10% decline it saw in that metric during the same period in 2021.

The retailer, which targets what it described as health-focused shoppers, has sought recently to draw customers to its stores by offering a greater selection of prepared foods, grab-and-go options and other products that compete with restaurant offerings. In a sign that shoppers are paying attention to those efforts, a $4.99 deli sandwich the company sells ignited a viral video campaign on TikTok this summer that amassed more than 10 million views.