| June 4
June 4 Starbucks Corp said on Monday is
buying La Boulange bakery owner Bay Bread Group for $100 million
in cash in a deal that is its biggest move yet outside coffee
and takes direct aim at what long has been seen as the company's
biggest weakness: food.
The world's biggest coffee chain said its first order of
business is to offer La Boulange croissants, pastries, cookies
and other food in its own stores over time. It also intends to
build the 19-cafe San Francisco Bay Area operator into a
La Boulange will be the second retail business Starbucks has
acquired in less than a year. It bought juice seller Evolution
Fresh for $30 million in cash in November and opened the first
in a planned collection of Evolution Fresh juice bars in a
swanky Seattle suburb in March.
Starbucks' acquisition of Bay Bread is scheduled to close in
the fiscal fourth quarter ended Sept 30. It is expected to
reduce earnings per share in the second half of the fiscal year
by a total of 2 cents, Starbucks Chief Financial Officer Troy
Alstead told Reuters.
Food now accounts for about 19 percent of Starbucks U.S.
store business, or about $1.5 billion in annual revenue at
domestic, company-operated stores.
Despite the fact that two-thirds of transactions at U.S.
Starbucks cafes do not include a food purchase, the category has
grown by double-digit percentage rates in each of the last two
fiscal years within the company, Alstead said.
"There's still a huge opportunity for us to do more,"
The CFO expects that offering higher quality and more
variety in the food department will perk up sales overall.
"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," Alstead said.
While many U.S. Starbucks cafe have food warming ovens, none
have kitchens. That has allowed the company to focus on cranking
out high-profit drinks, but has restricted efforts to make its
food more appealing.