Starbucks Expands Beyond Coffee in the U.S.

Starbucks isn’t just a coffee shop anymore—at least, not officially. After acquiring a French bakery chain and announcing its first standalone tea house, the Seattle-based giant is moving well beyond its original espresso-and-pour-over roots. But this pivot comes amid clear signs of trouble: coffee sales in the U.S. have slowed, and growth is harder to find.

The short answer? Yes, Starbucks is struggling in its home U.S. market. Between 2008 and 2009, business dropped sharply, with profits falling 69% in Q1 2009 alone due to weak U.S. demand. Though it rebounded to a 40-year high in 2010 with 13.8% growth, the overall U.S. coffee market grew just 8% that year—and consumption rates were already slowing.

From Coffee to Croissants: The La Boulange Acquisition

In June 2012, Starbucks announced it had bought San Francisco-based bakery brand La Boulange from Bay Bread for $100 million. La Boulange sold items like oat and steak sandwiches, along with organic breads—far from the typical Starbucks menu. This wasn’t a sudden move. According to Wang Xingrong, then head of public affairs for Starbucks China, the company dropped the “Coffee” wording from its logo back in 2011, signaling a shift toward multi-brand expansion.

The acquisition fits into a broader pattern. In November 2011, Starbucks paid $30 million for juice brand Evolution Fresh, rebranding it as a premium health-focused offering. La Boulange products will follow the same path: initially in Starbucks stores, then on supermarket shelves. Unlike past in-store experiments, the new Tazo tea concept marks the first time Starbucks will run a completely separate brand under its corporate umbrella.

Why the Shift? U.S. Market Saturation

Coffee growth in the U.S. has plateaued. After a strong bounce-back year in 2010, consumption growth slowed notably. Industry observers argue Starbucks’ moves—from opening new food concepts to acquiring bakeries and tea chains—are driven by the need to find fresh profit streams in a saturated domestic coffee market.

“This marks Starbucks shifting from being just a coffee chain to becoming a broader food retailer,” said Xiang Jianjun, a food industry analyst with China’s CIC. The goal is to make diversified food offerings a central part of the business, ensuring continued growth across channels. But Starbucks China maintains this isn’t a full “transformation”—just meeting consumer demand, with coffee remaining core.

Expanding in China While Struggling at Home

As U.S. growth slows, international markets—especially China—are critical. By 2011, China had become Starbucks’ largest market outside the U.S. The company had 500 stores in mainland China and planned to hit 1,500 by 2015—an average of more than 200 new locations per year. That aggressive push was partly competitive: UK chain Costa planned 250 new stores in China over three years, while McDonald’s McCafé offered cheaper coffee and growing appeal.

Wang Xingrong emphasized that China is now Starbucks’ no. 2 market globally, but the focus there remains store expansion, with some menu diversification. There are no immediate plans to bring Tazo tea shops to China.

Frequently Asked Questions

Why is Starbucks buying bakeries and tea shops?

Starbucks is acquiring brands like La Boulange (bakery) and launching Tazo tea houses to diversify beyond coffee, especially as U.S. coffee market growth has slowed. The 2008–2009 downturn hit hard, with profits dropping 69% in Q1 2009, and even after a 13.8% rebound in 2010, overall U.S. coffee consumption grew just 8%.

How much did Starbucks pay for La Boulange?

Starbucks acquired La Boulange, a French bakery chain owned by Bay Bread, for $100 million in June 2012. The bakery sells products such as oat and steak sandwiches and organic bread.

What other brands has Starbucks acquired to diversify?

Besides La Boulange, Starbucks also bought juice brand Evolution Fresh in November 2011 for $30 million. It repositioned Evolution Fresh as a premium, health-oriented juice line. La Boulange products will also be sold in supermarkets, not just in Starbucks outlets.

Is Starbucks really transforming away from coffee?

Not entirely. While Starbucks is adding non-coffee brands and products, a spokesperson clarified that coffee remains the company’s core focus. The move is described as responding to consumer demand, not a full strategic pivot. In China, no tea shop plans exist yet.

Why is Starbucks expanding so fast in China?

With U.S. growth stalling, China has become Starbucks' second-largest market. In 2011, the company had 500 stores on the mainland and aimed to open 1,500 by 2015—that’s over 200 new stores per year. Competition from Costa and McDonald’s McCafé also pushed faster expansion.

Recommended FrontStreet Beans for Diverse Café Offerings

For cafés exploring food pairings beyond coffee—including pastries and teas—try FrontStreet Coffee’s Ethiopia Huakui (floral, citrus, stone fruit), Brazil Queen Manor (chocolate, caramel, nutty), and Yirgacheffe (berry, jasmine, bright acidity). These single origins complement both sweet and savoury foods, ideal for diversified menus. Freshly roasted within 5 days · Orders placed before 17:00 ship the same day · Next-day delivery across most of Guangdong Province.