Starbucks turns to famed baker to improve brand’s food appeal

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by John Blackstone

CBS News

Posted on September 17, 2013 at 8:40 AM

Updated Tuesday, Sep 17 at 12:35 PM

(CBS News) Something is brewing at Starbucks, and it’s not the coffee.

For years, the java giant has struggled to prepare food that its customers find appealing. So last year, the company bought a bakery chain in San Francisco for $100 million. And now, the pressure is on for profits to rise.

So now the company is turning to Pascal Rigo for a sales jolt. When Rigo mixes things up, it usually involves flour, sugar and plenty of butter. The baker, born in France, started the now-22-store La Boulange Bakery chain in San Francisco in 1999.

Recently, Rigo, who was doing well in San Francisco, received a surprise phone call.

“I almost didn’t take the call,” Rigo told CBS News’ John Blackstone. “It was Howard Schultz from Starbucks.”

The chief executive officer of the iconic company made Rigo an offer he couldn’t refuse—to buy his company for $100 million. The Starbucks team had a problem it wanted to solve.

“Today, only a third of the people who come into our stores buy our food,” said Cliff Burrows, president of Starbucks Americas. “They buy coffee and they go elsewhere for their food.”

While breakfast sandwiches caught on, the company’s attempts to branch out into other meals fell flat.

Burrows said, “We have, for a long time, known that we wanted to upgrade our food, and here we met this guy with tremendous energy, real passion, and a dream.”

By the end of next year, La Boulange food will be available in all of the nearly 8,000 Starbucks across America.

Blackstone asked Rigo, “Can you do it for 8,000 stores across the country?”

Rigo replied, “So we replicate this idea with bakers that are our partners all around the country.”

Rigo won’t make everything in San Francisco. He’ll continue to use and expand the network of bakeries Starbucks has always worked with. The difference: now he’ll train and supervise them personally, and encourage them to buy their ingredients locally and produce regional variations.

So does that mean there won’t be consistency and there will be different products in each market?

Rigo said, “It could be different, I mean, the base of the recipe is the same, OK, the technique is the same, but at the end of the day, you’ve got something different here and there.”

Blackstone pointed out, “The company has tried food before and hasn’t succeeded.”

Rigo replied, “But they didn’t have a baker, and now they do.”

Starbucks’ $100 million bet on Rigo will only pay off if it can turn passionate coffee drinkers into passionate eaters as well.

 

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