Starbucks to close all 23 La Boulange locations

LaBoulange

(Photo: USA Today)

 

SAN FRANCISCO — Having learned how make the croissants, Starbucks no longer needs the croissant-maker.

The Seattle-based coffee retailer will close all 23 of its La Boulange bakery-cafes in the next three months, saying the stores “weren’t sustainable for the company’s long-term growth.”

The cafes, known for their French-inspired decor and menus, and the pink envelopes that now cup pastries sold at Starbucks stores, are favorite breakfast and lunch spots in the San Francisco Bay Area. Starbucks bought Bay Bread and the La Boulange brand in 2012 for $100 million.

The deal was seen as a strategic move by Starbucks (SBUX) to gain a bigger presence in the food business, particularly as traditional fast-food chains like McDonald’s improved their coffee offerings.

“After more than 40 years, we will be able to say that we are bakers, too,” Howard Schultz, CEO at Starbucks, said at the time.

In a statement on its website Tuesday, Starbucks said it would close the locations, as well as the two manufacturing facilities that serve the cafes, by the end of September. The brand will “continue to play a significant role in the future of Starbucks food in stores,” and it will keep selling La Boulange food at Starbucks locations, it said.

It’s also closing the Evolution Fresh retail location in San Francisco.

Analysts said the closures likely reflect a decision by Starbucks to focus on its extensive chain of Starbucks stores, rather than run two separate operating businesses.

“While they’ve had some success with La Boulange-branded products, running the stores was a distraction,” said David Henkes, vice president at Technomic, a restaurant research and consulting company. “You see that a lot: with big brands buying smaller brands, they decide to put their energy in growing the bigger brand.”

French-American baker Pascal Rigo started the La Boulange bakery chain with one location in San Francisco, and had been working within Starbucks to roll out the branded products across the U.S. and Canada. He’ll leave the company.

Starbucks learned a lot from the bakery chain, but the stand-alone stores weren’t sustainable on their own, said Jack Russo, an analyst with Edward Jones.

“Starbucks’ same-store sales have been improving over the past few years with a great deal of help from their food offerings, so the investment in La Boulange was well worth it,” he said.

Food sales rose 16% year-over-year in its most recent quarter, according to the company, and sales of its new breakfast sandwiches have contributed to a 35% jump in breakfast sales.

 

http://www.usatoday.com/story/money/2015/06/17/starbucks-la-boulange/28851063/

Click here to read the full article at USA Today

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