Starbucks invests in bakery to feed upscale concepts

Starbucks (NASDAQ:SBUX) is growing the number of upscale Reserve-only outlets and has invested in an Italian bakery to help supply them.

The new Starbucks Reserve-only stores will begin rolling out in 2017. Starbucks already operates roughly 2,000 Reserve stores globally that sell the company's standard coffee drinks plus a selection of small-lot Reserve coffees, according to The Seattle Times.

The new Reserve-only stores will serve just Reserve, and will let customers select the brewing method such as French press or pour-over styles. It's a way for Starbucks to compete with a new breed of coffeehouse that specializes in a craft coffee product and experience, such as La Colombe.

In order to offer more premium food products, Starbucks is also investing in Italian bakery Princi, which was opened by Rocco Princi in 1986. The plan is to serve Princi foods in Roastery and Reserve-only locations and also open stand-alone stores.

"What we do with our small-batch coffees is take very special beans and develop a recipe to roast them perfectly. Rocco's artisanal approach matches the care we take with our coffees, crafted and prepared with passion and care," said Liz Muller, VP, Starbucks creative and global design. "There is artistry to what we both do to deliver an exceptional experience to our customers."

Princi bakes pastries on site in wood-fired ovens, an experience Starbucks CEO Howard Schultz plans to replicate at the new locations. "We're going to be baking from scratch in our Roasteries the kind of food that perfectly complements our most premium coffee experience," said Schultz.

This isn't Starbucks' first bakery buy. The company purchased La Boulange Bakery in 2012 and incorporated the pastries into its stores, serving breakfast sandwiches and other baked goods all day. While the menu helped drive double-digit sales growth at Starbucks stores, the company shuttered the stand-alone units in 2015.

For more:
- see this Starbucks press release
- see this Seattle Times story