La Boulange roll-out 'encouraging' for Starbucks

by Eric Schroeder
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SEATTLE — As has been the case for the past 12 months, Starbucks Corp. is experiencing “strong, continued growth” from its food platform, especially in the United States, said Cliff Burrows, president of Americas & U.S.

In an April 25 conference call with financial analysts in connection with the release of Starbucks’ second-quarter results, Mr. Burrows said the Seattle-based company has been able to get “healthy margins out of our food,” adding that the food platform has increased the “relevance” of Starbucks as a place for people to come throughout the day. He said expanded Panini availability and strong Bistro Box performance have aided growth in the afternoon day-part.

Mr. Burrows also was optimistic about the integration of the La Boulange bakery brand into Starbucks’ U.S. stores. Starbucks acquired San Francisco-based Bay Bread, L.L.C. and its La Boulange bakery brand for $100 million from management and an investment group, Next World Group, last year. La Boulange operates 19 retail locations in the Bay Area and sells baked goods, pastries, salads and sandwiches in a casual, sit-down setting.

“At the end of the second quarter, we had 150 Starbucks stores carrying La Boulange products,” Mr. Burrows said. “As of today, we’re in 439 stores, having rolled out to the entire San Francisco bay area. And the lift we’ve seen thus far, while it’s still early, has been encouraging.

“I look forward to sharing more detail with you as our insights become even more meaningful. What I can tell you is that La Boulange pastries will roll out in the Pacific Northwest, including Seattle, in June, then will expand to cities including Los Angeles and Chicago, followed later in the year by New York and Boston. We remain on track to have La Boulange products in all our U.S. company-operated stores by the end of 2014.”

Mr. Burrows noted the roll-out of the La Boulange products also fits into Starbucks’ health and wellness strategy.

“As it relates to our new bakery products, the fantastic thing with those new bakery products is they are all-natural ingredients … there are no artificial ingredients,” he explained. “We use natural sweetening. Therefore, we can reduce sugar.”

He said Starbucks will supplement the La Boulange products with other products to provide a health and wellness balance.

“It’s important to us for both food and for beverage … to give healthy options,” he said.
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