Starbucks Food Strategy and La Boulange Update
Food is a key element of Starbucks growth strategy to create new occasions to visit stores, and the company has seen tremendous response to these efforts since the acquisition of La Boulange. In the most recent quarter, (Q2 FY15) food delivered growth of 16 percent year-over-year and contributed two points to the comp growth with every daypart, platform and region contributing to the increase. Sales of Starbucks new breakfast sandwiches have contributed a noteworthy 35 percent year-over-year growth in the breakfast platform. And, the company’s lunch platform delivered double-digit year-over-year gains. Starbucks has successfully delivered an up-leveled food experience with the roll-out of La Boulange products in its U.S. and Canada stores, which have been well received by customers.
As Starbucks stays steadfast in its commitment to achieve long-term growth targets enterprise-wide, it is with careful consideration the company shares the difficult decision to close all 23 La Boulange retail (bakery cafés) locations, as well as the two manufacturing facilities that serve those locations, by the end of September 2015. As a standard course of business, Starbucks continually evaluates all components of its business to confirm they are aligned with key priorities and strategies for growth, which includes the continued analysis of the store portfolio. Based on our ongoing evaluations, Starbucks has determined La Boulange stores are not sustainable for the company’s long-term growth. The La Boulange brand will continue to play a significant role in the future of Starbucks food in stores, and the company looks forward to serving delicious La Boulange food at its Starbucks retail locations in San Francisco and across the U.S. and Canada. The Evolution Fresh retail location in San Francisco will also close.
All partners (employees) who work in these locations are being treated with the utmost care – receiving personalized transition materials and having in-person conversations with their managers to explain this decision. Where possible, Starbucks will help partners find new positions at Starbucks stores in the area. In addition, retail partners from La Boulange and Evolution Fresh will be offered incentives to continue employment with the company through their store closure.
Partnering with Pascal Rigo, founder and creative force behind La Boulange, to bring his passion for developing authentic, homemade specialties made with simple, high quality ingredients to customers on a broad scale through Starbucks has resulted in a reinvented and elevated food portfolio, delivering the best possible customer experience at Starbucks. Now that the roll-out of La Boulange products within Starbucks stores in the U.S. and Canada is complete, Pascal will move on from Starbucks to continue his passion for food in San Francisco while dedicating more time and resources toward his nonprofit ventures in an effort to supply quality food to schools with underprivileged children and bring innovative after-school clinics to help children with learning disabilities.
Starbucks goals to grow its food business and deliver an incremental $2 billion in the next five years in the U.S. are unchanged. Starbucks will continue to deepen its commitment to customers’ food experience in stores, ensuring it surpasses their expectations, just as the company has done with coffee and beverages.