Starbucks Buying San Francisco Bakery

Proving their business is about more than just coffee, Starbucks Corp announced Monday it was purchasing La Boulange Bakery owner Bay Bread LLC for $100 million.

The move is the java giant’s largest yet outside of coffee according to Reuters, and is intended to improve Starbucks‘ food quality and variety.

Initial plans call for getting La Boulange items like croissants and cookies into Starbucks’ stores, but the company also announced the desire to turn La Boulange into a national chain.

The 19-store chain is Starbucks’ second retail acquisition in less than a year after buying Evolution Fresh, a juice seller, last November.

According to the Associated Press, the deal positions Starbucks to compete in a part of the restaurant market currently dominated by Panera Bread Co. While just one third of purchases made at Starbucks include a food item, that number seems to be growing.

“There’s still a huge opportunity for us to do more… As more traffic comes in to our stores, we know that if they’re buying food, there’s an opportunity for them to buy a beverage,” Starbucks Chief Financial Officer Troy Alstead told Reuters.

Many Starbucks locations have food warming ovens, but none in the U.S. have kitchens, as opposed to Panera which makes its own breads and pastries fresh each day.

While that has allowed Starbucks to focus on creating high-quality, high-profit beverages, it has limited its ability to improve food quality.

With Starbucks buying San Francisco-based bakery La Boulange, that could change the companies standing as it pertains to food sales.

(Image courtesy of Database Answers)