Starbucks to Acquire La Boulange Bakery

Deal will bolster the coffee chain's core food offerings and allow Starbucks to expand into other dayparts.

In a deal valued at $100 million, Starbucks Coffee Company (NASDAQ:SBUX) has reached an agreement to acquire San Francisco-based Bay Bread, LLC and its La Boulange bakery brand from management and investment group, Next World Group. Starbucks also announced it will hire renowned French baker Pascal Rigo, who opened the first La Boulange location in 1999.

When the deal closes, Bay Bread, LLC and the La Boulange bakery brand become a wholly-owned subsidiary of Starbucks Corporation and Pascal becomes senior vice president and general manager of La Boulange bakery at Starbucks.

La Boulange bakery operates 19 retail locations in the Bay Area and sells its products in several upscale restaurants, hotels, and specialty grocery stores in the region. La Boulange bakery and Pascal are known for crafting authentic French pastries and breads from scratch. With this acquisition, Starbucks plans to introduce many of Pascal's recipes into its U.S. company-operated stores under the La Boulange brand. In order to achieve this, Starbucks will look to make investments to broaden distribution capacity in select markets, while working closely with outside suppliers to create various La Boulange products for Starbucks stores nationwide. The company will continue to serve Bay Bread, LLC's wholesale bakery customers and will evaluate expanding distribution over time. Starbucks also plans to accelerate the expansion of the company's retail footprint over time in key U.S. cities.

"The acquisition of La Boulange bakery will help us to expand day-parts, drive customer loyalty and ultimately grow the overall business through differentiated brand experiences and multiple channels," said Cliff Burrows, president, Starbucks Americas, who will oversee the integration and expansion of La Boulange.

Food now accounts for $1.5 billion in revenues in Starbucks' U.S. company-operated stores and has grown by double digits in each of the last two fiscal years, according to a company release.

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