Earlier in July, Starbucks (NASDAQ:SBUX) announced it was teaming up with Italian baker Rocco Princi to once again try to perfect its food offerings. It's been down this road before, having purchased a specialty bakery, but it didn't pan out as well as hoped. While it continues to sell its baked goods, the individual stores have all been shuttered. Maybe a partnership without actually having to own the operation will work better.
In this clip from the Motley Fool Money radio show, Chris Hill and Simon Erickson talk about the most important things that'll come of this deal and how Starbucks is proving its drive to stay innovative and enjoyable.
A full transcript follows the video.
This podcast was recorded on July 15, 2016.
Chris Hill: Starbucks is taking yet another run at trying to improve their food offerings. The company is teaming up with Rocco Princi, a highly regarded Italian baker, to bring artisan bakery items into the stores starting in 2017. Simon, you look at La Boulange... I'm not saying it was a flop, but it certainly didn't work out as well as they were hoping.
Simon Erickson: Yeah. La Boulange, obviously, Starbucks, last year, if investors remember, they closed down the 23 stand-alone stores that were offering pastries that Starbucks had an interest in as well. The interesting thing to me, Chris, is that they're still selling those pastries in the existing Starbucks locations. So, I think whether or not Princi continues as a stand-alone location in the future or it doesn't, the more important part of this is, are they going to continue to sell those foods in Starbucks locations? Keep in mind, food still accounts for about 20% of sales within all of Starbucks's restaurants. We saw a 7% increase in comps last year, so it's still doing very well.
Hill: It'll be interesting to see what happens to throughput as well, because this is the first time that they're actually going to be baking stuff on the premises. If that has a negative effect on throughput, then I think they might need to rethink it.
Erickson: And Starbucks has always been the third place where you go outside of home and work. The third place is getting a lot more awesome. They're opening now roasteries and reserve-only locations, which are multiple times larger than the traditional ones, but they have things like in-store baked goods and different types of coffee from areas of the world you wouldn't typically get coffee from. I think they're adding a premium to their brand. I think this is a good move for the company.