Starbucks is investing in and becoming a licensee of Italian bakery Princi, with plans to open Princi stores and to carry Princi foods in its roasteries and a new line of Starbucks stores opening in 2017.
In a bid to offer more premium food and appeal to more discerning palates, Starbucks is investing in high-end Italian bakery Princi, with plans to open Princi stores and to carry Princi foods in its Roastery showcases and a new line of Starbucks stores opening in 2017.
Princi, which now has four locations in Milan and one in London, offers 24-hour service, from light breakfast to dinners, according to Starbucks, which announced the deal Wednesday.
Starbucks plans to open the first Princi store under this new licensing agreement next year in Seattle, Starbucks Chairman and CEO Howard Schultz said in a conference call Wednesday.
Schultz talked of walking into a Princi store years ago and being “blown away” by the quality of the food and presentation, calling it a “visually intoxicating environment.”
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Under the agreement, Princi will also become the exclusive supplier of food to Starbucks’ new Roastery locations, starting with Shanghai and New York, which are slated to open in 2017 and 2018, respectively. However, the Seattle Roastery, which opened in 2014, won’t carry Princi food, because it has an in-house Serious Pie restaurant operated by Tom Douglas, who also provides the pastries for the store.
Princi also will be the exclusive food supplier for a new line of Reserve-only stores that Starbucks plans to open in 2017.
Starbucks already has some 2,000 Reserve stores around the world, in which coffee drinks from the company’s traditional core menu are served, alongside the small-lot Reserve coffees.
The new line of stores would serve only Reserve coffees and offer customers a choice in how they want their coffee brewed, including French press and pour over. The Reserve-only stores may also serve beer and wine.
Schultz declined to say how many Princi stores or Starbucks Reserve-only stores the company plans to open. Nor did he disclose the amount the company is investing in the deal.
La Boulange would remain the core supplier of food in the traditional Starbucks stores.
Starbucks has been expanding its food offerings in recent years, hoping to entice more people to its stores at all hours of the day. Food sales grew 16 percent year-over-year in its most recent quarter, company executives said, and accounted for 20 percent of U.S. sales.
Through its Roastery and Reserve line, Starbucks also has been targeting coffee connoisseurs and those who tend to frequent “third wave” coffee shops, where the emphasis is on the coffee bean, from origin to roast.
“We’re learning a lot” from the Roastery about capturing what appeals to customers on the premium end, Schultz said during the call. “Our customers expect and desire a higher level of product and experience from Starbucks. ”
After the mixed outcome of Starbucks’ acquisition of San Francisco-based La Boulange, some wonder whether the coffee giant has the chops to make a global success of the Princi stores.
Starbucks acquired the bakery chain for $100 million in 2012. La Boulange succeeded in supplying higher-quality food, resulting in double-digit growth in food sales.
In 2015, though, Starbucks closed all 23 retail locations of the bakery chain.
“Given how Starbucks has gone with La Boulange, how’s it going to take Princi with a half-dozen stores and take that expertise across Europe, Asia, elsewhere?” said Burt Flickinger III, retail analyst with Strategic Research Group. “To hope to scale that worldwide, it seems like Starbucks’ reach is exceeding its proverbial grasp.”
Its Reserve-only stores, however, may see some success, said Flickinger, who regards the company’s Reserve coffees and its Roastery as “extremely successful in terms of customer acceptance and making them a demand item, a destination.”