Starbucks & Bay Bread

Starbucks, the world's largest coffee-shop operator, agreed to buy Bay Bread for $100 million, adding to its expanding portfolio of non-coffee businesses.


The San Francisco-based Bay Bread and its La Boulange brand is a French-themed bakery that sells granola, flank-steak sandwiches and organic bread, according to its website.

Since returning as CEO in 2008, Howard Schultz has introduced Via instant coffee, wrested control of packaged-goods distribution from Kraft Foods, and bought a juicemaker to cash in on the health-and-wellness trend. The purchase of a bakery extends the company's reach further beyond its coffee-shop roots.

"Food is a critical component of the core Starbucks business," Chief Financial Officer Troy Alstead said in a telephone interview with Bloomberg. Food, including fruit salads, chicken lettuce wraps and blueberry scones, makes up about 19% of sales at Starbucks U.S. stores, he said.

La Boulange bakery operates 19 stores in the San Francisco area and sells its products in restaurants, hotels and grocery stores, according to the statement.

Starbucks' revenue rose 6.3% to $8.04 billion in the U.S. in the year ended Oct. 2. The company's domestic segment made up 69% of revenue last year.

Last year, Starbucks paid $30 million for Evolution Fresh and has since opened one cafe to sell the flash-pasteurized juice, which it also plans to put in grocery stores. In March, Starbucks said it would sell 60-calorie, green-coffee extract energy drinks called Refreshers.

Starbucks has about 17,400 stores worldwide, including more than 10,800 in the U.S.

-- Bloomberg News --