Starbucks is opening up an entirely new kind of store to build a gourmet food empire
Kate Taylor
Princi
(Baked goods at Princi London.Princi London)
Starbucks is opening a new type of store and, for the first time, baking food in-house at certain locations, thanks to a partnership with a trendy Italian bakery.
On Wednesday, Starbucks announced a partnership with Princi, an artisan Italian bakery and restaurant.
In 2017, new Starbucks Roastery locations will begin baking Princi items in the stores. Additionally, Princi will be the only food served in Starbucks' Reserve-only stores — a new store format that will open next year.
"This will be the first time in our 45-year history that we will actually be baking in a store," Starbucks CEO Howard Schultz said in a call with reporters. "The Roasteries in New York and Shanghai, and others that will be announced in coming months, will have a fully-integrated bakery operation in the facility, not unlike what we're doing in terms of roasting."
Princi
(Princi is known for it's around-the-clock menu, something that's key as Starbucks works to build its lunch and dinner businesses.Princi London)
Schultz said that Princi's "intoxicating, seductive" environment made it the perfect pick as a partner for the next evolution of the Roastery experience.
The first location of the "chic bakery" was founded by Rocco Princi in 1986 and has since expanded to four locations in Milan and one in London.
As part of the partnership and investment, Starbucks will assume the role of licensee in new Princi stores, with plans to open a number of standalone Princi locations worldwide, including one in Seattle in 2017.
In recent years, Starbucks has doubled down on quality and more gourmet fare. In an effort to grow its premium coffee business, the company debuted the functional and theatrical Reserve Roastery and Tasting Room in December 2014. Today, there are nearly 2,000 Starbucks Reserve cafes, selling the company's premium coffee line along with the traditional Starbucks menu.
Starbucks Reserve
(Existing Starbucks Reserve locations serve Reserve coffee and other options.Marina Nazario/Business Insider)
Now it seems the chain is trying to do the same thing with food as it has done with coffee.
Starbucks Reserve-only stores are key to what Schultz calls "the next evolution of the Starbucks Roastery experience."
"Given the response we've had to the Roastery and Reserve coffee, we believe that there's an opportunity to build a coffee-forward store," said Schultz. "This is an opportunity for us to elevate food in a way we never have before."
Roastery Starbucks
(The Roastery coffee bar provides an immersive experience that will be replicated in Reserve-only stores.Kate Taylor)
The Reserve-only stores will be larger than the typical Starbucks (300 square meters versus 150 square meters) and feature the highly visual Roastery bar, which offers five different methods of coffee preparation.
Starbucks did not provide a numbers of Reserve-only stores planned, though Schultz said there were "hundreds of opportunities in both Reserve stores and Princi stores in the US alone."
Unlike current Reserve stores, Reserve-only stores will exclusively serve Princi food. They will also only offer Starbucks small-lot Reserve coffee instead of serving both Reserve and other brews.
The Reserve-only stores and the partnership with Princi represent a new step in Starbucks' obsession with quality, following in the footsteps of the Roastery.
"The success of the Roastery in Seattle has really opened up the aperture of our enthusiasm and our strategic push to elevate at almost every level the premiumization of the Starbucks customer experience going forward," said Schultz.
As the chain opens more Roasteries, they will serve as important testing grounds for Starbucks. While the vast majority of Starbucks locations will continue to serve La Boulange Bakery items, Princi will be a chance to explore a new food approach.
Roastery
(Starbucks' Roastery has been called the "Willy Wonka" of coffee.Kate Taylor)
When Starbucks bought La Boulange in 2012 for $100 million, it acquired all the bakery's recipes. When the chain shuttered in 2015, these recipes proved to be more valuable than La Boulange's 23 locations, helping Starbucks boost its food business in the double-digits every year since the acquisition.
Just because Princi will initially only be served at Roasteries and in Reserve-only stores does not mean the bakery's ideas and recipes will be contained to a handful of locations. Starbucks' cold brew started as a test at the Roastery before rolling out nationwide in summer 2015; nitro cold brew was a Roastery test before rolling out to 500 locations this summer.
Still, don't expect artisan Italian baked goods to show up at your local Starbucks anytime soon. Reserve-only stores and Princi may be the future of Starbucks, but Schultz says that they represent a growing segment of premium locations, intended to coexist with — not replace — Starbucks locations across the world.
"It's not that we're fixing something that's broken," said Schultz. "Quite the opposite. We're elevating the food experience in key, new locations that will be a premium, coffee-forward experience … We're talking today about a small segment of an opportunity that over time will be much bigger."
