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Starbucks buys San Francisco bakery chain; will expand format across U.S.

Seattle -- Starbucks Coffee Co. is looking to expand its food business. The chain has entered into an agreement to acquire San Francisco-based Bay Bread and its La Boulange bakery brand, as well as to hire its well-known French baker, Pascal Rigo. The cash deal is valued at $100 million.

La Boulange, which also serves salads and sandwiches, has 19 locations in the Bay Area. In addition to serving the bakery’s pastries, breads and sandwiches under the La Boulange name in its U.S. stores, Starbucks also plans to accelerate the expansion of the company’s retail footprint over time in key U.S. cities.

“This is an investment in our core business. After more than 40 years, we will be able to say that we are bakers too,” said Howard Schultz, Starbucks chairman, president and CEO.

In recent years, Starbucks has made major enhancements to its food offerings based on customer feedback, including diversifying its portfolio to include smaller portion sizes. Food now accounts for $1.5 billion in revenues in U.S. company-operated stores and has grown by double digits in each of the last two fiscal years.

“The acquisition of La Boulange bakery will help us to expand day-parts, drive customer loyalty and ultimately grow the overall business through differentiated brand experiences and multiple channels,” said Cliff Burrows, president, Starbucks Americas, who will oversee the integration and expansion of La Boulange.

The La Boulange acquisition is second retail business Starbucks has acquired in less than a year. In November, it bought juice seller Evolution Fresh for $30 million.

© 2014