Starbucks (NASDAQ:SBUX) announced late Monday an agreement to acquire the San Francisco-based Bay Bread and its La Boulange bakery brand for $100 million in cash.
Additionally, the world’s largest coffee chain has hired French baker Pascal Rigo. Rigo is known throughout the culinary world for his skillfully crafted pastries and breads. He opened the first La Boulange bakery in 1999.
The coffee king said the acquisition will help elevate its food menu in retail locations. Baked goods from La Boulange will first be available at Starbucks’ San Francisco stores. Over time, the company intends to grow its bakery line and sell the products in its locations nationwide.
“This is an investment in our core business. After more than 40 years, we will be able to say that we are bakers too,” Starbucks CEO Howard Schultz said in a press release. “In La Boulange bakery and Pascal, we’ve found a company and a culinary artist who share our passion for creating premium products, reinventing and elevating an entire product category, and delivering the best customer experience.”
Starbucks said food accounts for about $1.5 billion in revenues in its U.S. stores. The company expects the acquisition will dilute its second-quarter earnings by about 2 cents per share. However, SBUX shares were down more than 3% in morning trading.