Starbucks Invests in High-End Italian Bakery Princi
14 July 2016 - 8:07AM
Dow Jones News
By Julie Jargon
Starbucks Corp. is partnering with a luxury Italian bakery in an
effort to move more upscale.
The coffee giant has made an investment in high-end Italian
bakery and pizzeria Princi that allows it to develop and operate
all new Princi locations outside of Italy, including in the U.S.,
and to offer Princi baked goods in Starbucks' new specialty coffee
stores.
Starbucks has been trying to overcome its reputation as a mass
coffee brand and better compete with the likes of Stumptown and
Intelligentsia by introducing single-origin coffees in
supermarkets, improving its food offerings and opening a massive
coffee shop in Seattle where coffee is roasted.
Starbucks Chief Executive Howard Schultz said that customers are
increasingly seeking "a higher level of product."
Starbucks also plans to open a roastery store in Shanghai next
year and in New York in 2018 as well as a separate chain of
"reserve-only" stores that are twice the size of a traditional
Starbucks and offer a manual espresso machine and four different
methods of brewing its small-batch "reserve" coffees, instead of
just the drip method available at most of its coffee shops. The
company in 2014 said it planned to open 100 reserve-only stores,
but on Wednesday declined to provide an updated number.
Mr. Schultz said that operating different stores beyond its
Starbucks chain will allow the company to offer coffee at varying
price points, much the way the company has done with its lower-end
Seattle's Best brand.
The arrangement with Princi also will help Starbucks boost its
revenue from food, which has been a big driver of its growth in
recent years. Starbucks acquired Bay Bread LLC in 2012 so it could
sell its La Boulange pastries, famous in San Francisco, in its
coffee shops. Starbucks' food had drawn complaints about its
quality and consistency, and since the rollout of products made
with La Boulange recipes, food sales at Starbucks have grown at
double-digit rates. Starbucks last year closed the 23 La Boulange
shops in California and brought the brand entirely in-house. The La
Boulange products will continue to be sold at traditional Starbucks
cafes.
Baked goods made from Princi recipes will be sold at the new
roastery stores as well as the reserve-only stores. Starbucks
declined to disclose the size of its investment in Princi, but the
agreement gives Starbucks the rights to open Princi locations
around the world, except in its home country, in order, Mr. Schultz
said, to respect its local heritage. Founder Rocco Princi operates
five shops in Milan, as well as one in London.
Starbucks, which plans to open its first coffee shop in Italy
next year, said it won't be a traditional Starbucks but rather a
flagship store that will serve Princi food. Mr. Schultz wouldn't
disclose how that store will be branded. Starbucks plans to open
the first U.S. Princi store next year in Seattle.
Mr. Schultz, who was inspired to develop a coffee culture during
a business trip to Milan and Verona 33 years ago said, "I've been
dreaming of bringing Princi to Starbucks."
Write to Julie Jargon at julie.jargon@wsj.com
(END) Dow Jones Newswires
July 13, 2016 17:52 ET (21:52 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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