Starbucks rolls out their new baked goods. So what?

July 21, 2009

So what - well, there's a free baked good today at any Starbucks. That should be enough to get any self-respecting bakery category manager over to see the new spread. Okay, you have to be there by 10:30, buy a drink and bring the invitation you printed out on their website.

If you've been following the ads in major newspapers, such as the Wall St Journal, New York Times and USA Today, you're familiar with the fact that Starbucks has been positioning and promoting their new food menu, a significant percentage of which is baked goods. If you thought it was about baked goods, you're wrong, with Starbucks, it is always all about coffee. Starbucks has been under pressure from McDonald's McCafe and among other initiatives, is using the food menu to respond. Their positioning against McCafe? All natural, healthy and even low calorie options. And green and politically correct. There will be no price increases with this revamp.

What are the implications for folks responsible for in-store bakery? Well, if you want to emulate that positioning – healthy, natural, etc. – you can look to the bakery case to find what millions of dollars in staff, agencies and market research have told Starbucks: oats, blueberries and retro desserts. Specifically, Outrageous Oatmeal Cookies, Blueberry Oat Bars, Blueberry Streusel Muffin, Reduced-fat Very Berry Coffeecake, Banana Walnut Bread and Marshmallow Dream Bars. In the Boston-area stores we visited, there were also Old Fashioned Donuts – so misshapen as to give a new spin on the concept of handmade, Passion Fruit Coconut Bars, Morning Buns, Scones, Muffins, Apple Fritters and the traditional Cinnamon Roll. The Valencia Orange gluten-free cake, which debuted in March of this year, is also in the case.

Starbucks began a sourcing initiative over a year ago to control manufacturing costs and to reduce the total number of suppliers. With extensive RFPs and requests for detailed cost information, it was perhaps a familiar approach for major suppliers, but hardly SOP for Starbucks' smaller bakery vendors. Starbucks has moved from regional fresh suppliers to a national program with a significant thaw and sell component, working with a limited number of high volume frozen suppliers. One commercial bakery, Crestone Group of San Diego, is suing Starbucks for stealing their proprietary recipes and reneging on business agreements. Crestone had built plants specifically to supply Starbucks.

In addition, the food offerings have been simplified and made more consistent across stores. Along with a revamped product line, the bakery case changes have been launched with a mix of advertising, promotions and digital media. In June, Brandweek reported that Starbucks has 200,000 followers on Twitter and 1.8 million fans on Facebook. On Facebook, those who are interested are asked to RSVP to the invitation to meet for coffee and a free pastry.

Do the pastries actually taste better? Can it help Starbucks? Well, on those topics, your comments are needed.