This is a rant.
I am ETF Monkey. Not Stock Monkey, ETF Monkey. For the most part, my goal is to write about ETFs. But today I am going to write about a stock. I am going to write about Starbucks (NASDAQ:
SBUX). A company I like. A company I am going to try very hard to like after today. But a company that just made it a little harder for me to do so.
What has made it so difficult for me?
This announcement, released two days ago, June 16, 2015. In a masterpiece of "corporate speak," Starbucks announced that they are going to "close all 23 La Boulange retail (bakery cafes) locations, as well as the two manufacturing facilities that serve those locations, by the end of September 2015." In other words, pretty much everything that was actually La Boulange. What do I mean by that?
La Boulange - A Brief History
La Boulange was founded in San Francisco in 1999 by
Pascal Rigo, a native of Bordeaux, France who later emigrated to the United States. Rigo had earlier started the Panissimo Group, starting with a small bakery on Pine Street in San Francisco. Between 1999 and 2010, the date of the article linked above, La Boulange had expanded to 13 locations--all in the San Francisco Bay Area--and was generating $19 million in sales. By the date of the
sale to Starbucks, announced on June 4, 2012, La Boulange had grown to 19 locations.
All baking was done each night in a central bakery, and the freshly baked bread and pastries were delivered to each retail location prior to their 7 a.m. opening time. Any items left over at the end of the day were donated to local charities, ensuring that everything sold in their stores was fresh.
Clearly, the combination of La Boulange's ambiance, quality freshly-baked items, as well as their other offerings, captured both the hearts and wallets of local consumers.
After the Sale
Reaction from locals to the sale was immediate, and largely negative. Here is just one example, tweeted by a retail analyst in the San Francisco area:
This just sucks!
$SBUX buying my FAVORITE lunch spot. The mom & pop atmosphere will all but disappear at
#La Boulange.
#SadDayforSF
But more than that, once the "La Boulange" items started to appear in Starbucks stores, customers quickly noticed that they, uh, weren't exactly the freshly-baked and delivered items that you got in an actual La Boulange. In fact, one blogger went as far as to call them '
The Most Disgusting Breakfast On Earth.'
The End of the Story?
Apparently, yesterday's announcement means the end for the retail concept known as La Boulange.
- For employees, it apparently means that Starbucks will attempt to relocate them to nearby Starbucks locations, if possible.
- For Pascal Rigo, it apparently means that he will move on to other ventures, including "dedicating more time and resources to his nonprofit ventures . . . ." That sounds, to me, like corporate-speak for "we have a non-compete agreement firmly in place so Pascal doesn't start another competing concept."
- For consumers, it appears that the unique concept known as La Boulange, with the delicious freshly baked bread and pastries, will simply disappear.
At the end of the day, then, it would appear Starbucks bought La Boulange for their intellectual property.
Starbucks has the right, of course, to run their business as they see fit. I don't deny them that.
I wonder what, though, this says about our culture? Apparently, our lives are so rushed, so fast-paced, that speed is more important than quality? Gone is the appeal of a freshly baked croissant, literally minutes (or at the most a few hours) out of the oven, in favor of something that has been baked far away, forced to survive channels of distribution, and reheated in an attempt to recapture some of the original quality? Essentially, not much different from what you could find in your local supermarket. All in the name of speed, and efficiency.
And for the local community of San Francisco? Just one more business shut down. One more favorite hangout that no longer exists. One less choice, replaced by incessant homogenization.
Investment Thesis
Oh, by the way, buy Starbucks. From a business standpoint, I'm sure this move makes eminent sense.
From a cultural standpoint, though, I wonder if we have become desensitized to just how much we are missing?
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