Starbucks's New Pastries Roll Out in NYC, McDonald's Releases Mobile Pay App

By Josh Wolonick  SEP 17, 2013 4:49 PM

Plus, Cinnabon introduces the "Pizzabon."

 


Starbucks Begins Rolling Out Its New Menu Items in NYC

As part its plan to amp up the food segment of its retail business, Starbucks (NASDAQ:SBUX) acquired the San Francisco-based La Boulange Bakery for $100 million in June 2012. Now, with La Boulange food products gradually being rolled out across the country, the new pastries and assorted baked goods have finally made their way to 50 stores in New York City. By the end of the 2014's fiscal year (the end of September 2014), the company aims to have 7,000 of its US stores serving La Boulange products.

The question is, will La Boulange prove to be a valuable investment that allows Starbucks to more evenly compete with bakery restaurants like Au Bon Pain, Le Pain Quotidien, and even the industry leader, Panera Bread (NASDAQ:PNRA)? Or was the dough wasted?

For $100 million, Starbucks obviously believes that it has potential in the bakery fast-food market, and it has put a lot of its faith in Pascal Rigo, the French-American restaurateur behind La Boulange. According to him, every year, some 1.5 billion people come into Starbucks stores around the world without ordering food. His main goal is to change that.

Rigo's San Francisco empire of bakeries consists of 22 locations that bring in about 140,000 customers per week. In the US, Starbucks serves nearly 40 million patrons every week. Rigo now leads Starbucks's revamped food operation from a huge, 40,000-square-foot research center in San Francisco.

Under Rigo, Starbucks's new food offerings will be entirely without artificial flavors, dyes, or preservatives. As Rigo said, "It's the habit of processed food to look pretty." Speaking of his own pastries, he added, "These aren't pretty, or they're about as pretty as what you'd make at home." One thing that some of the new Starbucks food offerings will be, however, is frozen.

Following is an edited review from the user "evalunta" on Chowhound.

They just rolled out the La Boulange pastries in SoCal this week. C'est le crap! I wasn't going to eat my butternut squash pastry right away and so I asked them nicely not to heat it up and it FREAKED the entire staff out. The cashier, the barista, and the manager all argued with me and I hate to say it, but I caused a scene and my 12-year-old son isn't talking to me right now. But it was very satisfying that they admitted that the filling would be FROZEN. Hmmm frozen pastries. The whole place heard. Heehee. I heated it up at home later and it wasn't that bad. But I don't like to be forced to eat warmed-up pastries. 

Many other reviews like this have circulated on the Internet, and the gist is that La Boulange's food offerings are nothing special, although they're not necessarily bad.

As one customer told me, "I had a blueberry muffin that I thought was pretty good. But maybe I was just really hungry."

Perhaps the early negative reviews simply signify that Starbucks's new La Boulange offerings are suffering from opening months jitters, and that the company will continue to improve the quality of its food as part of its push to rival Panera and other bakery rivals. Or maybe Starbucks will regret the $100 million investment and just move on with its domination of the coffee retail industry.

In a recent interview, CBS News's John Blackstone presented Rigo with a cold hard fact, saying, "[Starbucks] has tried food before and hasn't succeeded."

To this, Rigo replied, "But they didn't have a baker, and now they do."
 
McDonald's Has a New Mobile Ordering App 

The fast-food giant is making ordering food at its restaurants even less personal.

At locations in Salt Lake City, Utah, and Austin, Texas, McDonald's (NYSE:MCD) is currently testing a new smartphone app that allows users to both order and pay for their food before they even enter the restaurant. This is the latest news in a long series of high-tech experiments at the seemingly traditional fast-food giant. Currently, the company is testing wireless charging stations for cellphones and other devices in several of its European stores.

Going back even further, McDonald's was one of the very first companies, fast-food or otherwise, that offered its customers completely free, no-strings-attached Wi-Fi access.

Many fast-food and retail companies have followed the example of McDonald's. For example, Starbucks followed McDonald's and began offering free Wi-Fi, and it is also currently testing wireless charging stations in all of its Silicon Valley, California, branches. Moreover, the coffee retailer allows its customers in the US and Canada to pay for their coffees, mochas, or Pumpkin Spice Lattes with the Pay by Square app for Apple's (NASDAQ:AAPL) iPhone.
 
Cinnabon's New Pizzabon

Since 1985, the shopping mall food court staple Cinnabon has served sweets exclusively. Heading up its line of baked goods since the very beginning has been its classic Cinnabon cinnamon roll. Now 28 years old, the company is introducing a savory option for a limited time: the "Pizzabon." The new mini pizza roll is available for $2.99,  but for now, it's only at the Cinnabon venue in Atlanta's Cumberland Mall, which features a test kitchen for trying new products.

The new Pizzabon is the size of the company's Minibon, but it is baked with cheese, tomato sauce, and pepperoni. Obviously, offering a product that is not sweet and sticky will have its challenges for the company. Said Rachel Hadley, a spokesperson for the company, "It's a little tricky because I think a lot of people think of Cinnabon and think of a sweet indulgence and not necessarily something savory." 

Moreover, Hadley noted the difficulty that other products face gaining traction at Cinnabon, given the huge popularity of its simple Classic Roll. "We've had the Minibon -- the smaller version of the Classic Roll -- for 25 years, but not a lot of people know us for the Minibon because people focus on the Classic."

Whether the Pizzabon expands beyond Atlanta remains to be seen.

Follow me on Twitter: @JoshWolonick and @Minyanville
No positions in stocks mentioned.