Starbucks Debuts La Boulange Cafe in Los Angeles - Analyst Blog

French bakery chain, La Boulange, owned by Starbucks Corporation SBUX, opened a café in Los Angeles on Jun 12 — the first restaurant outside its hometown San Francisco.

The La Boulange restaurant features an all-day concept offering breakfast, lunch and dinner. The restaurant's menu features some popular dishes available at the San Francisco cafés such as omelets, granola and yogurt, sandwiches, and burgers made from grass-fed beef. Beverage options include coffee, tap wine and beer, house-made specialty cocktails and handmade milkshakes.

The high-end bakery chain, acquired by Starbucks in 2012, runs 22 cafés in San Francisco. La Boulange bakery products are also available in more than 6,000 company-owned Starbucks stores in the U.S. and 2,500 licensed stores. These products are expected to be available in all U.S. stores by the end of this year. Following the success of the bakery goods, the company is testing La Boulange lunch items, scheduled to be launched in 2015.

The acquisition has greatly enhanced Starbucks' core food offering driving increased purchases and thereby growing both traffic and boosting ticket growth at its U.S. stores.

In fact, premium priced La Boulange bakery items significantly contributed to improved comps in the U.S. coupled with new breakfast sandwiches and seasonal beverages in the last reported quarter — second-quarter fiscal 2014. Food items have significantly improved comps growth at the U.S. stores in the last 3-4 quarters.

Other Stocks to Consider

Starbucks carries a Zacks Rank #3 (Hold). Better-ranked restaurateurs include Burger King Worldwide, Inc. BKW, Buffalo Wild Wings Inc. BWLD and Red Robin Gourmet Burgers Inc. RRGB. While Buffalo Wild Wings sports a Zacks Rank #1 (Strong Buy), Burger King and Red Robin carry a Zacks Rank #2 (Buy).