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Starbucks Buys Bakery Chain For $100M

Posted On: 6/12/2012

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Starbucks, Startisan bakery chain, Bay Bread, La Boulange, Howard Schultz, Starbucks food, Starbucks expansion, Next World Group

La Boulange

SEATTLE -- Starbucks plans to purchase San Francisco-based artisan bakery chain Bay Bread and its La Boulange brand for $100 million in a move to upgrade its pastry offerings.

Starbucks chief executive Howard Schultz said La Boulange's artisan bakery goods will attract more customers and bolster both food and beverage sales. "It's a product that will match the quality of our coffee," he said.

The signature croissants, pastries, cookies and breads served at the 19-unit La Boulange bakery chain will start replacing Starbucks's current baked goods lineup early next year. They will first appear in Bay Area stores and then roll out nationally.

Starbucks has hired the bakery chain's founder, French baker Pascal Rigo, who is known for baking authentic French pastries and breads from scratch.

"After more than 40 years, we will be able to say that we are bakers, too," Schultz said.

Starbucks said it also plans to grow the San Francisco-area bakery chain into a national presence in the coming years. La Boulange products are sold wholesale in several upscale restaurants, hotels and specialty grocers in the Bay Area, and Starbucks aims to expand that business.

The Seattle coffee giant will purchase the San Francisco-based bakery chain from the privately held investment firm Next World Group. The transaction is expected to close in the third quarter of 2012.

Food is one of Starbucks' fastest-growing segments, now accounting for $1.5 billion a year and one-third of its transactions.

Starbucks made its first major foray outside coffee this spring with its purchase of the Evolution Fresh juice brand. | SEE STORY