By Tiffany Hsu
3:55 PM CDT, June 4, 2012
Starbucks Coffee Co. is planning to add artisan breads and pastries to its menu, spending $100 million in cash to buy Bay Area bakery brand La Boulange.
Acquiescing to customer demand for “more wholesome and delicious food options,” the Seattle cafe giant said Monday that it will buy San Francisco-based Bay Bread and hire French baker Pascal Rigo from investment group Next World Group.
Rigo’s “secret and storied recipes,” which involve fresh ingredients and locally-sourced produce, will be integrated in Starbucks-owned stores across the U.S., starting in the San Francisco area. The company’s food options account for $1.5 billion of its revenues and, as a sector, have grown by double digits over the past two fiscal years.
A third of transactions at Starbucks involve a food element, said Chief Executive Howard Schultz in a conference call announcing the purchase, which is expected to close in the company's fiscal fourth quarter following regulatory approvals.“This is an investment in our core business,” Schultz said in an earlier statement. “After more than 40 years, we will be able to say that we are bakers too.”
Starbucks is now also a juice purveyor and sometime alcohol seller. The company said it has made a push in recent years to get rid of artificial ingredients and offer smaller portion sizes. It has also caved to consumer concerns about add-ins such as dyes made from cochineal insects.
Once the deal goes through, Rigo will be named senior vice president and general manager of La Boulange Bakery at Starbucks. Bay Bread’s wholesale customers will continue to be served as usual.
Cliff Burrows, president of Starbucks’ U.S. and Americas segment, said that the company will work with outside suppliers to expand La Boulange’s offerings but stressed its “unwavering commitment” to the brand’s uniqueness. He said he expects the acquisition to help drive customer traffic into Starbucks, especially in the morning.
La Boulange currently operates 19 Bay Area stores selling croissants, pastries, loaves, cookies, breads and more as well as products in upscale restaurants, hotels and specialty grocery stores in the region.
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