Store closings happen all the time in our retail paradise of America. If it’s a small store, you’ll never hear about it unless you do business there. If it’s a big chain, it’s in the media, like GAP’s announcement that it would close 175 stores. People who don’t work there shrug it off.
But the announcement that Starbucks would shut down by the end of September all 23 La Boulange cafés in the Bay Area (most of them in San Francisco) and two plants that supply them with freshly baked bread and pastries and other foods left me with, let’s say, mixed emotions.
Two of the cafés are within easy walking distance: in North Beach (on Columbus) and on Russian Hill (on Polk), the latter being one of our favorite lunch spots and source of freshly baked bread and croissants. What attracted us to La Boulange when we came to San Francisco was the bread, particularly the “peasant bread,” a big round loaf with a thick, crispy crust. That first slice with some butter, oh my!
At the time, the Polk location was small, and on weekend mornings, noisy and cramped. When they moved to the larger location next door, it was a relief. Whether it made sense financially is another question.
When Starbucks announced in the summer of 2012 that it would acquire La Boulange for $100 million in cash, corporate speak washed over San Francisco.
“In La Boulange, we’ve found a company that shares our passion for reinventing and elevating an entire product category while doing it in a socially responsible way.”
“We see an opportunity to bring the artistry of the French bakery to the U.S. marketplace in a similar way that Starbucks brought the romance of the Italian espresso bar to many American coffee consumers for the first time.”
La Boulange Founder Pascal Rigo was made senior VP and charged with developing recipes and training suppliers to make pastries the way he’d been doing it for years.
At La Boulange, the coffee changed and the service got smoother. There might have been other signs of Starbucks-ization, but we didn’t see them.
Starbucks has since been selling La Boulange-labeled sandwiches and other foods at its stores in the US and Canada. Last quarter, sales of food items jumped 16% year over year. So they must have done something right.
Starbucks actually bought the parent company, Bay Bread LLC, whose delicious “peasant bread” you can also buy at Trader Joe’s here where it’s called “Pain Pauline.” But it’s sold as a half-loaf in a plastic bag, which softens the crust and ruins it. So you have to take the half-loaf out of the bag and set it cut-side-down on the counter for 24 hours to let the crust get crusty again. And you’ll never get that first crusty slice of freshly baked bread.
So Trader Joe’s might be scrambling right now to find another supplier for its stores in the Bay Area.
Six years before Starbucks appeared on the scene, Rigo, who hails from Bordeaux, France, sold a majority stake of Bay Bread to Next World Group, a privately-held investment firm. Its original intention was to expand La Boulange nationwide with hundreds of outlets. But by 2012, six years into it, they still hadn’t started going nationwide.
“It would have taken us much more time,” explained Sébastien Lépinard, founder of NWG. “Having Starbucks come in is an amazing opportunity for La Boulange and Bay Bread.” It was an exit, and he went for it.
Modern Luxury, which sat down with Rigo for a chat, put it this way at the time of the sale:
The deal – a tacit acknowledgment by Starbucks that its current selection of mega-scones and other bloated fare is “terrible,” as Rigo puts it in an unguarded moment – means that he and his team will be supplying food to tens of millions of customers a year. “It’s like being in charge of one-third of the bakeries in France,” he marvels.
So why shut La Boulange down now, after two failed attempts to take it nationwide? Why not keep it around as a San Francisco institution? Was it losing that much money?
Running the stores has become a distraction, Burrows said. Makes sense. Why go through the hassles of turning 23 cafés mostly in San Francisco into 230 cafés nationwide when Starbucks already has a machinery in place that stamped out “more than 21,000 stores in over 65 countries,” as it says.
The deal never made sense on that level. It wouldn’t surprise me to learn that it had been planned all along to shut down the cafés once “La Boulange” has become an established brand inside every Starbucks.
So Burrows told the Wall Street Journal in impeccable corporate speak that an analysis determined that “the La Boulange cafes are not a sustainable model for Starbucks long term.” Sure, there were underperforming stores, but the main reason for shutting the whole thing down was to focus on the core Starbucks business, he said. And Rigo would leave Starbucks.
Perhaps this will make room for new ventures, even better bread and croissants. Or perhaps Starbucks will put its own stores in some of the locations. Either way, we’ll miss La Boulange on Polk. We certainly won’t be buying our bread or croissants at Starbucks. And we wish Rigo good luck with his next endeavor.
A miracle happened in San Francisco in May. The median home price, after having already spiked in the prior months, jumped again. But we know how to deal with this: We’re “riding this wave while we can, as far as we can, for as long as we can.” Read… San Francisco Insanity: Median Home Jumps to $1,275,000