30 July 2013 - Store sales for Starbucks in the Americas grew 9% in the latest quarter, and food contributed significantly towards the growth in its U.S. business in particular.
In the quarter, Starbucks was able to expand its La Boulange baked goods platform, a brand integrated about a year ago, when the company acquired San Francisco-based Bay Bread, LLC.
In the long-term it is expected that La Boulange branded food will eventually be in all Starbucks stores across the U.S. and Starbucks believes the brand has potential not only in U.S. stores but in foreign markets as well.
"Delicious and differentiated La Boulange branded products are now available in over 1,000 Starbucks stores across northern California and the Pacific Northwest", Starbucks CEO Howard Schultz recently told analysts.
"We're seeing both an enthusiastic customer response and a substantial lift compared to the baked goods that La Boulange is replacing", he added.
Adding on to Schultz's comments, Cliff Burrows, Group President for Starbucks in the Americas and US, EMEA and Teavana, said: "We're seeing really, really encouraging results. So the strategy is being justified and we are now through 1,000 stores by the end of Q3 and every market we open we see a great reception, particularly around the pastries, the croissant which is the core product in this line of La Boulange".
"It gives us every confidence that we're on the road to fantastic growth platform. We’ll start with breakfast. We’ll then enhance lunch. And the opportunity to enhance the current experience to the customers and gross sales is really strong. I’m looking forward to 2014 and 2015. I’m extremely optimistic that this will be a platform to growth", Burrows added.
Schultz went on to say that Starbucks is growing its capability for La Boulange and he believes that his company is showing that it can deliver world-class products in Starbucks stores. However, he admitted that it is still early days for his firm.
"As you can imagine we are having to learn the way to operate food within our store environment and obviously it’s got to compliment the coffee but we make sure we do not slow down the speed of service. And the first 1,000 stores has been an amazing learning opportunity", he commented.
The CEO added: "We have also with La Boulange capability able to respond quickly to adapt recipes and to evolve our product offering. I just think we’re at the beginning we’ve got the capability but only around breakfast and we are able to start testing some lunch ideas".
"We are in the early days here in the U.S. but I can imagine the recipes and ideas. We’ve started in license rules and it will go into other parts of the world. And this a global capability that we’re going to develop and it will be matching all beverage capabilities we’ve had for the last 30 years".
Schultz concluded by saying that Starbucks is now on track to bring La Boulange Food to more than 2,500 of stores by the end of September, including stores in New York, Chicago, Boston and Los Angeles.