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LATIN, MATRIPEDICABUS, DO YOU SPEAK IT
http://www.latimes.com/business/la-fi-starbucks-food-20130727,0,6241032,full.story
Coffee giant Starbucks is targeting foodies with its new menu items. The more upscale lineup will feature products sourced from local farmers and designed to look handmade.
By Tiffany Hsu
July 26, 2013, 6:17 p.m.
Starbucks Corp. is unleashing a new food lineup that shares more with the artisanal fare at an intimate country cafe than the cookie-cutter products it currently serves at some 19,000 stores in 63 countries.
The products, which will start reaching Los Angeles on Tuesday, include items, some low fat or gluten free, stuffed with sustainably grown fruit and vegetables or topped with a range of glazes.
The more upscale creations are being spearheaded by Pascal Rigo, a Frenchman who last year sold his Bay Area bakery brand La Boulange to Starbucks for $100 million. La Boulange serves 140,000 customers a week at 22 locations. Starbucks gets nearly 40 million U.S. patrons a week.
The coffee behemoth, based in Seattle, has installed Rigo at the helm of its food operation, which he oversees from an expanded 40,000-square-foot research and development center in San Francisco.
But Rigo swears he hasn't "sold out or gone corporate." He has no chemists or food scientists on staff. "No compromises," he said during a recent visit to Southern California.
"It's a new beginning," he said. "The mission is higher than what I've ever done before."
Starbucks on Thursday reported fiscal third-quarter earnings of $417.8 million, up from $333.1 million in the year-earlier quarter. Revenue jumped 13.3% to $3.7 billion. Sales at stores open at least 13 months rose 8% globally and 9% in the U.S.
The company said it opened 341 new stores, bringing its worldwide total to 19,209 locations. For the full year, it expects revenue growth of as much as 13% as well as 600 new stores in the Americas.
Each year, some 1.5 billion people come into Starbucks without buying its food, Rigo said. He hopes to change that with new pastries spreading nationwide to nearly 7,000 company-owned stores by the end of the 2014 fiscal year.
First up: the so-called mini-bakeries that have already launched in Seattle and Bay Area stores. The displays will arrive in Los Angeles before hopping to Chicago. Customer sampling will be encouraged.
Products made without artificial flavors, dyes or preservatives include a summer berry croissant with a chunky fruit compote made in Orange County sans added sugar or gelatin. A spinach croissant is made with flaxseed and whole wheat crust. A downsized chocolate croissant has single-origin chocolate from Colombia.
The lemon loaf now comes in individual blocks instead of slices to better preserve moisture. Customers get their choice of glazes, including cream cheese and vanilla Starbucks' attempt at customization.
The food, which will feature "affordable, not intimidating" pricing, is also designed to look handmade, Rigo said. Eventually, the new products will reach grocery stores as well.
"It's the habit of processed food to look pretty," he said. "These aren't pretty, or they're about as pretty as what you'd make at home." The move could put Starbucks squarely in contention with chains such as Corner Bakery Cafe, Au Bon Pain, Le Pain Quotidien and, the gorilla of the industry, Panera Bread Co.
"Nobody has really been able to take on Panera and equal what they can do," said Kathy Hayden, a food-service analyst with Mintel. "There seems to be more room in the bakery cafe market."
Starbucks has never been a destination for food, she said. But it's now tapping into a market increasingly filled with foodies who, as the job market improves, have less time on their hands.
"The demand is there for slightly better fast food," she said. "We're outgrowing our burger and fries drive-through ways."
The company is also making a stronger push into the lunch market, which it calls a "huge opportunity." Starbucks has two San Francisco stores testing lunch options such as soups and sandwiches made with pesto, chimichurri, and barbecue and hot sauce.
"We get as many customers during the lunch period as Subway, but nobody ever says, 'Let's have lunch at Starbucks,'" Rigo said.
In testing mode: rice pudding in glass jars and premium breakfast sandwiches with fine cheeses and breads.
Rigo, however, is not planning to turn the chain into a health food preacher.
"It's not something we're planning to push like crazy," he said. "People should live their lives."
For Los Angeles, Starbucks plans to experiment with chocolate and vanilla pan dulce, pan queso and other items designed to appeal to the large local Latino population.
Starbucks and Rigo also revamped the food manufacturing process. Instead of relying on a small number of massive facilities, the new items are coming from smaller production lines at 25 to 30 bakeries nationwide.
Spreading out manufacturing allows the company to source ingredients from local farmers. The company has also trimmed the time from production to consumption to 60 days from as long as six months previously. Rigo said he's hoping to further slash the period to 30 days.
"We need to treat frozen food like it's fresh," he said.
In an attempt at consistency throughout the chain, the food won't be baked by employees at Starbucks' far-flung stores. But the partner bakeries will be allowed a measure of flexibility on the ingredients they use, Rigo said.
The chain has worked in recent years to expand beyond coffee while also pursuing tastes that foodies can appreciate.
Starbucks bought San Bernardino juice maker Evolution Fresh Inc. in 2011. At the brand's first California store, which opened last year in San Francisco, patrons get handcrafted, non-heated juices as well as organic, vegetarian and vegan food options.
In December, Starbucks closed its acquisition of Teavana Holdings Inc., adding the tea retailer to its existing Tazo tea brand.
Earlier this week, Starbucks announced a partnership with Danone, parent of yogurt brands Oikos and Activia. Next year, the coffee giant will begin serving Greek yogurt parfaits branded Evolution Fresh, Inspired by Dannon.
Jason Moser, an analyst with Motley Fool, called Rigo's recent food enhancements "a perfectly logical step for Starbucks."
"It's amazing to think about how far Starbucks has gotten thus far having never really gotten the food part right," he said. "If this plays out the way they hope, it could provide a significant boost to sales for years to come."
Added Mintel's Hayden: "It's a new direction, not an over-extension, for Starbucks."
