There's Life After Starbucks for La Boulange
It probably felt like the end of the line last year when Starbucks announced plans to close all 22 La Boulange pastry shops. This was the very same croissant-creating brand that Starbucks CEO Howard Schultz once publicly praised as a key to boosting the quality of Starbucks baked goods.
But for La Boulange founder Pascal Rigo, the store closure wasn’t the end. It was a new beginning. At 56, Rigo is in the midst of making one of fast-casual’s most widely watched reinventions. In Humpty Dumpty-like fashion, he is gluing the broken pieces together again and has opened five stores in the San Francisco Bay Area—with two more on the way—under the name, La Boulangerie de San Francisco.
His grand plans: to reassemble La Boulangerie as a fast-casual powerhouse by opening up some 20 to 40 locations. He also plans to enlarge its 40,000-foot baked goods facility in San Francisco that attracts business from such high-profile retail clients as Costco and, reportedly, Trader Joe’s. While it may not be quite the magnitude of what Chipotle CEO Steve Ells accomplished after buying back Chipotle from McDonald’s, the guy who founded La Boulange has a nice chunk of it back from Starbucks.
“We’re going back to the basics of what we’ve done for over 30 years,” Rigo says. “I’d like to open the same number of stores we had and see what that brings us. We feel we have a huge business to do in California.”
This is a far cry from summer of 2012, when Starbucks purchased the La Boulange bakery brand for $100 million, and named Rigo vice president of food at Starbucks. At the time, Schultz called the purchase an investment in Starbucks’ core business, noting, “After more than 40 years, we will be able to say that we are bakers, too.”
Then, last year, Starbucks issued a press release that said it would close all La Boulange stores because the chain was “not sustainable for the company’s long-term growth.” At the same time, Starbucks made clear it would continue selling La Boulange foods at Starbucks retail locations, and as Rigo slowly reassembles the La Boulangerie operation, he counts on Starbucks as a customer—and friend.
“I love Starbucks. They are a fantastic company,” Rigo says. And he utters nothing but praise for Schultz. “He is so genuine and gives everything he has to the people who work for him. His employees want to do anything and everything for him. I tried, too.”
The point of departure, he says, came when Starbucks opted not to tell consumers the detailed, behind-the-scenes story about what made Boulange food so special. “We worked around the clock to create unbelievable food with unbelievable ingredients,” he says. Like only using cage-free eggs and mostly organic ingredients without preservatives or additives. “The values of Starbucks are so good. But it didn’t want to tell the story behind our food to everyone,” he says.
It’s not that Starbucks did anything wrong, says Rigo. “They have unbelievable food and great ingredients.”
He concedes that some products he launched for Starbucks were not big hits—some of which were criticized for their small size. But others were extremely successful. At the time that Starbucks announced plans to close the La Boulange stores, Starbucks noted its food sales grew 16 percent in that most-recent quarter.
After leaving Starbucks, Rigo bought back a handful of La Boulange stores and renamed them La Boulangerie de San Francisco. He hasn’t looked back. He’s got plans to open at least two more locations this year and also plans a major expansion of the baked goods factory, which will nearly double in size to 70,000 square feet from the current 40,000.
Rigo says he learned a lot while working at Starbucks about how to create top quality food on a large scale. “I want people to believe its possible to do great, affordable food at scale,” he says.
So how big might he take the new La Boulangerie? “For me, it’s not about how big we can get,” he says. “It’s about, are we going to be the right kind of company that stays true to what we’ve started.”