What is in this article?:
- Starbucks' La Boulange platform reaches East Coast
- Sales-driving potential
Analysts see the new pastries as significant sales drivers after seeing their success in the Chicago market.
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In a report last week, a Wall Street analyst hailed the new pastries as a success, saying the platform could prove to be a significant sales driver.
Sharon Zackfia of William Blair & Company LLC did an analysis of the La Boulange launch in Chicago, roughly one month after the introduction there to allow restaurants time to adjust to the warming times required for the pastries.
Prior to the La Boulange rollout, Starbucks’ food offerings represented only about one out of three transactions nationally, averaging about 19 percent of the sales mix in U.S. locations. With the introduction of La Boulange, however, Zackfia said, “Food could represent the single largest incremental driver of U.S. comps over the next few years.”
Looking at five Chicago locations, Zackfia studied the “before” and “after” impact of the new menu items. Before the rollout, the stores averaged about 259 transactions per hour during the peak morning rush between 8 a.m. and 9 a.m. The food attachment rate averaged about 17 percent.
After the rollout, however, the stores recorded an average of 244 transactions per hour—a throughput decline of about 6 percent—with the food attachment increasing to 25 percent.
Zackfia noted, however, that two of the five units had no discernable negative impact on throughput. Those units increased the number of transactions during the hour.
The new products also brought slightly higher prices, however. The La Boulange items in the bakery case were about 7 percent higher in price, on average, which Zackfia argued could offset any slowdown in throughput.
“With our rough calculation suggesting every 5-percentage-point increase in food penetration equates to about 3 comp points, our analysis suggests that Chicago could be achieving a 4-percent to 5-percent comp lift on the La Boulange rollout, assuming peak morning hour results are replicable during the rest of the day” — which may not be the case, she noted, as the bakery case revamp focuses on breakfast items at this point.
In any event, Zackfia added, “It is hard not to regard La Boulange as a tremendous success for Starbucks, as food items sold per hour at the Chicago stores we analyzed rose from a range of 28 to 61 prelaunch to 52 to 71 after the launch. This performance is even more impressive in light of the intensity of competition in Chicago, as it is an established market for Dunkin’ Donuts, as well as the home court of McDonald’s.”
Contact Lisa Jennings at email@example.com.
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