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Starbucks Creates New Upscale Stores with Italian Bakery Princi

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On Thursday, popular coffee chain Starbucks Corp. (SBUX - Free Report) announced that it will be creating a new, high-end brand of stores, dubbed Starbucks Reserve-only. The new stores are set to offer premium, small lot reserve coffee in a space twice the size of a typical Starbucks.

In a press call, CEO Howard Schultz said "We recognize our customers expect and desire a higher level of product and we want to give it to them.” Schultz also said the Starbucks Reserve-Only stores are the “next evolution of the Starbucks Roastery experience.” Located in Seattle, the Starbucks Reserve Roastery and Tasting Room provides customers with an immersive, visual coffee bar experience, offering five different methods of coffee preparation.

Starbucks plans to open new Roastery stores in Shanghai next year, with one in New York slated for 2018. As for Reserve-only stores, the company did not provide a number of planned locations, though Schultz said there were "hundreds of opportunities [for] Reserve stores…in the U.S. alone."

In addition to the elevated coffee experience, Starbucks announced its investment in high-end Italian bakery and pizzeria chain Princi. The deal allows Starbucks to develop and operate all new Princi locations outside of Italy and in the U.S. By 2017, Starbucks Reserve-only stores will begin serving Princi baked goods, and a new Princi location is set to open next year in Seattle.

"Given the response we've had to the Roastery and Reserve coffee, we believe that there's an opportunity to build a coffee-forward store," said Schultz. "This is an opportunity for us to elevate food in a way we never have before."

This partnership with Princi will help Starbucks boost its food sales, a quickly growing facet of its business that has surpassed even its coffee sales. In the past, Starbucks’ food had drawn complaints about taste and consistency, but its acquisition of the La Boulange brand in 2012 helped the company turn around its food business. The Princi deal should enhance it even more.

Princi was founded by Rocco Princi in 1986, and currently has five locations in Milan and London.

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