Industry News | July 27, 2012 | QSR Exclusive Brief

Starbucks Ready to Roll Out French-Baked Goods

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Starbucks CEO Howard Schultz, during the company’s third quarter earnings call, told investors the quick serve was now in the process of rolling out French-baked food to U.S. stores. The new bakery selections will make their debut in the San Francisco Bay area. He described the move as one that would bring “the romance of the Italian espresso bar to many North American coffee consumers.” More locations will soon offer the expanded menu, he said.

With roughly one-third of U.S. company-owned store transactions now having a food component, Schultz said Starbucks’ food programs present a significant opportunity for growth “across multiple channels into the future.”

In the U.S market, comparable sales were up 7 percent, yet fell short of the company’s expectations, said Troy Alstead, CFO of Starbucks. He told investors a moderate but broadly based traffic slowdown hit the U.S. market in June. “There was no individual part of the business or daypart that we can point to; there’s no geography across the U.S. we can point to. There seemed to have been a very broadly based overarching change in the consumer feel.”

Despite the mysterious dip, Alstead said the company had high expectations for its new-store pipeline for the upcoming quarter.

In a familiar refrain, Schultz once again touted the company’s expertise in multichannel retail development, as well as mobile payment technology. He said the company is now processing more than a million mobile payment transactions per week in the U.S. alone. During the quarter, Starbucks launched a mobile app for Android users in Canada and the UK.

John Culver, president of the company’s China and Asia Pacific operations, said the region produced strong double-digit comparable sales for the 10th consecutive quarter.

In the third quarter, Starbucks opened a net 231 new stores around the world, including the 600th store in Mainland China and the company’s first stores in Costa Rica and Kenya. Starbucks expects to open an additional 1,200 net new stores in fiscal year 2013, with the majority in the U.S., China, and the Asian-Pacific region. Culver also announced the first store in India would open in the latter half of 2012.

By Jan Fletcher