More reports on: Foods / beverages

Starbucks to shut all 23 La Boulange bakery-cafes

17 June 2015

Starbucks has announced plans to shut all 23 of its La Boulange bakery-cafes, saying the stores "weren't sustainable for the company's long-term growth."
 La Boulange bakery-cafes
The cafes, with their distinctive French-inspired decor and menus, and the pink envelopes, were the favoured breakfast-lunch spots in the San Francisco Bay Area.

The company bought La Boulange in 2012 for $100 million, from the San Francisco-based cafe chain.

The deal is seen as a strategic move by Starbucks to enhance its presence in the food business, especially with traditional fast-food chains like McDonalds improving 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 yesterday, Starbucks said it would close the locations, and the two manufacturing facilities that served the cafes, by the end of September 2015. The brand would "continue to play a significant role in the future of Starbucks food in stores," and it would continue to sell La Boulange food at Starbucks locations, it said.

It would also close the Evolution Fresh retail location in San Francisco.

Even as it backed away from the stand-alone La Boulange stores, Starbucks stressed that food continued to be a big deal for the company. Food sales were up 16 per cent year-over-year in its most recent quarter, and sales of its new breakfast sandwiches had contributed to a 35-per cent jump in breakfast sales.

"Based on our ongoing evaluations, Starbucks has determined La Boulange stores are not sustainable for the company's long-term growth," the company said in a statement.

The news, which came as the Bay Area celebrated the state's win in the NBA Finals, quickly drew flak from La Boulange devotees.

"This proves that quality is dead and Lowest Common Denominator rules in the United States. An absolute farce," wrote Daniel Fischer on Twitter. Another fan, Karl Wong, tweeted: "Thanks for nothing @Starbucks! Thanks for ruining our local chain."

Following the purchase of La Boulange, the bakery's food quickly became part of Starbucks' menu. The move had paid off handsomely and in the most recent quarter, Starbucks' breakfast menu sales were up by 35 per cent over the previous year. Lunch sales also went up by double digits.

Starbucks, which will retain the La Boulange brand, said it would "continue to play a significant role in the future of Starbucks food."

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