What is Starbucks baking up with its latest investment?


Starbucks announced earlier this week that it was part of a group making an investment in Princi, an artisanal Italian bakery. Starbucks plans to make Princi the exclusive supplier of foods at its new Reserve Roastery and Tasting Rooms in New York and Shanghai. Princi will also be “fully integrated” as the exclusive supplier of food to Starbucks’ new Reserve store concept, beginning next year.
“We have never baked in our stores in 45 years. But all of that will change with the creation of this unique partnership,” said Howard Schultz, Starbucks chairman and CEO, in a statement. “Rocco and his team at Princi possess a passion for handcrafted food and artisanal baked goods that mirrors how I feel about our coffee.”
At the present time, there are five Princi locations: four in Milan and one in London. Mr. Princi opened his first bakery in 1986. Starbucks, according to The Seattle Times, currently has about 2,000 Reserve stores operating around the world.
This is not the first time that Starbucks has invested in a bakery. In 2012, Starbucks acquired La Boulange, a San Francisco Bay-area pastry chain, with the goal of taking it nationwide. By mid-2015, Starbucks announced it would close all 23 La Boulange locations. La Boulange has continued to operate as Starbucks’ primary food provider. Starbucks posted double-digit year-over-year growth in its food sales, which now represent about 20 percent of the coffee chain’s total.
- Starbucks in Bringing Leading Italian Artisan Bakery Princi to Customers Worldwide – Starbucks Corporation
- Starbucks buys into Italian bakery firm, with eye on expansion – The Seattle Times (tiered sub.)
- Leading Italian Artisan Baker to Create Food for New Starbucks Roasteries – Starbucks
- Starbucks dumps tea bar concept, keeps tea – RetailWire
- Starbucks buys a bakery – RetailWire
DISCUSSION QUESTIONS: What do you think of Starbucks’ plans for Princi? Do you think Starbucks and Princi will be able to maintain the quality of product now served in five locations when extended to thousands?
Join the Discussion!
19 Comments on "What is Starbucks baking up with its latest investment?"
You must be logged in to post a comment.
You must be logged in to post a comment.
President, b2b Solutions, LLC
Size matters. It can be a good thing or not, depending. This is a lesson all businesses have learned. It is one thing to serve an exceptional handcrafted food item in a limited number of locations with a dedicated staff. It is quite another to try to replicate that in hundreds to say nothing of thousands of locations.
In order to do the latter Starbucks will have to find a way to commercialize the product and thus, in all likelihood, remove some or most of what makes it artisanal. This does not mean that it won’t be good and something that finds commercial success, but it will not be the same as what the four locations serve today.
Co-founder, RSR Research
The magic question is always “can you maintain quality control at scale?” Not just with food, but pretty much with everything we sell.
I think this is a great idea and brings Starbucks into a richer market (if possible). Hopefully, they can find a way to manage the quality because if they can, it’s a winner.
SVP Sales & Business Development, Theatro
As one who enjoys the non-coffee offerings at Starbucks, I am hoping for a winner too.
Principal, The Feedback Group
It will be difficult for Starbucks to retain the qualities and uniqueness that make the product artisanal as they move from handcrafted to commercial. Hopefully they can hold on to enough characteristics to still offer a compelling and differentiated product that is appealing to shoppers.
Principal, Retail Technology Group
Introducing an on-premise bakery is not an easy task. It requires remodeling in the kitchen. If I were going to do that, I would test it VERY slowly. Better to have Princi be the provider of freshly baked goods daily and DELIVERED to Starbucks regionally. There is a sufficiently dense concentration of Starbucks locations to have regional bakeries. It’s one way of making sure that quality and uniformity of product are maintained.
Editor-in-Chief, Retail TouchPoints
I think it’s a very niche investment. Quality control certainly will be an issue. And will the smell of baked goods overtake the coffee aromas we’re used to when we walk into a Starbucks? As a chain-wide initiative, I think bringing in the ability to offer in-store baked items is valuable. Consumers want high-quality food items, especially at a retailer where they’re spending top dollar on their daily caffeine fix.
Contributing Editor, RetailWire; Founder and CEO, Vision First
Scaling artisan products is an oxymoron, isn’t it? Hoping Starbucks learned from their Boulange experience. It’s a great idea and would drive traffic and sales … if they can execute.
President, The Ian Percy Corporation
Yes it is. Wish I had said that, Patricia! Fits exactly with what I was thinking in my commentary.
SVP Sales & Business Development, Theatro
Good question and point Patricia. Question is … would 90% artisan and 10% to enable scale be good enough? I think Starbucks is smart enough to not let the perfect be the enemy of the good — and seems to have made that work many times over already.
President, The Ian Percy Corporation
Owner, Tony O's Supermarket and Catering
President, The Ian Percy Corporation
I thought of you immediately in reading this item, Tony, and knew you understood what I’m talking about. BTW…you promised me your lasagna recipe 423 days and 14 hours ago…but whenever you have the chance! Not sure I can replicate it, but am eager to try. You have a good weekend too.
Owner, Tony O's Supermarket and Catering
Email me, as I have a short memory, and I’ll get it to you. Sorry Ian!
Urban Planner
The points others have made about serving and delivering to the stores at the regional scale make sense.
In other comments on other entries I’ve made the point about how companies like Walgreens, REI, etc., are developing flagship stores apart and special from the typical version. Obviously Starbucks is already doing this.
Best to make this an element of those offerings, maybe even exclusively to see how it works out. If great baking worked at scale, we’d have such artisanal bakeries already functioning. The closest we have to it are Panera and Great Harvest Bread Co. (Then again, the lack of good local bakeries has led me to take up baking for myself. The output isn’t as pretty as a great bakery, but tastes a lot better than a lot of the product that’s out there.)
Global Managing Director, Prosper Business Development
Centralize a bakery in a hub fashion around a dozen Starbucks. Yes, this does create new logistic issues. Baking, especially artisan, is in many ways an art form. If Starbucks has to outfit a bakery operation in all 12 of those locations and then ramp up and maintain training of personnel, product times, etc., they are going to experience greater operational problems than the logistics ones.
With a centralized bakery, Starbucks/Princi will be able to experiment with a greater variety of products. In addition, that bakery could serve as an added supplier to specialty restaurants in the area.
The plan calls for a bakery in each store. Test a couple of markets with the central bakery concept. The Melman organization in Chicago has been able to place a number of products from their Chicago bakery into their restaurants in a successful fashion. Use that highly successful restaurateur’s model as a guide.
Chief Amazement Officer, Shepard Presentations, LLC
In theory I like this. It gives Starbucks another identifiable food experience beyond coffee. The question that is being raised by fellow BrainTrust colleagues is the first thing that came to my mind. How do you scale this to all stores, big and small? (Small stores are more the concern.) I don’t know if every store can bake, but perhaps some stores can become distribution centers for the others that can’t.
Director, SaaS Marketing, Zebra Technologies
Taking a localized, low volume, quality baked product to mass production is difficult, but on behalf of all of all those who appreciate the baked goods over the coffee, I hope they succeed.
SVP Sales & Business Development, Theatro
President, Affluent Insights & The Home Trust International
Starbucks has to create a food product equal to their coffee. It shouldn’t have taken this long. On the other hand, Starbucks’s greatest feat is replicating processes. No reason to believe they can’t do the same with a bakery.