Rocco Princi opened his first store in Villa San Giovanni, Italy and moved his business to Milan in 1986. Back then, Howard Schultz was still convincing the founders of Starbucks that coffeehouses could catch on in the U.S. Now, Starbucks, with more than 13,000 U.S. locations, has invested in Princi, and is bringing to the U.S. a second location of the high-end bakery and bar.
"We as a company were so intrigued by the possibility," Selim Giray, Starbucks VP of business planning for Princi, recalls of meeting with the Italian chain's founder about six years ago.
While there definitely won't be nearly as many locations for Princi, the chain is starting to grow, thanks to Starbucks. On Tuesday, Starbucks will open a Chicago location for Princi, its second U.S. location and its first outside Seattle.
The Windy City location may be the latest sign that an established giant is eager to truly test a new concept. The opening comes just a day after Amazon opened its first cashier-free Amazon Go store outside Seattle, also in Chicago. The openings of both stores, while separate from each other, show how companies are setting their sites on urban expansion.
Starbucks' 2016 investment in Princi gave the coffee giant access to higher-end baked goods and another way to try to get people to linger longer and spend more. Princi's upscale shops sell food, such as sweet and savory breakfast cornetti (Italy's buttery, curved answer to France's croissant), pizzas, salads and sweets, as well as coffee, cocktails, wine and beer.
Ad Age got an early look at the Chicago shop last week. Here are a few things worth knowing.
Didn't Starbucks try this before? Not exactly.
Princi is even more high-end and has fewer locations than La Boulange Bakery, the upscale San Francisco-based chain Starbucks bought for $100 million in 2012. French baker Pascal Rigo also joined Starbucks as part of that deal. Princi remains tied to his own business and struck an undisclosed investment and global licensee deal with Starbucks. The La Boulange takeover was largely to get that company's recipes and enhance the food at mainstream Starbucks shops. And while in some ways it was a success, Starbucks decided that running La Boulange shops didn't make much sense for the coffee giant, which closed the La Boulange chain and parted ways with Rigo in 2015. Now, Starbucks is licensing the Princi name and gets all of the revenue from the shops it opens. Starbucks also tried selling beer and wine through its Starbucks Evenings program, which ultimately made it into a few hundred U.S. locations before ending in 2017. Princi's service, which includes a bartender making cocktails to order, is decidedly different.
"They've got a history of acquiring businesses, usually with the stated intention at the time of running them as standalone businesses or integrating them into Starbucks," says David Henkes, senior principal at Technomic.
At least for now, the plan is to keep Princi product offerings for the standalone and Starbucks Reserve Roastery shops, massive flagships where coffee is roasted on site. "There's got to be a strategy behind this that helps grow the broader Starbucks business," says Henkes.
And right now, Starbucks could indeed use a little jolt. U.S. same-store sales rose just 1 percent in the recent fiscal third quarter, down from 5 percent growth in the same period a year earlier.
Princi products come at a premium to regular Starbucks (but there are still deals)
While a Starbucks breakfast isn't the least expensive deal on the market, its ever-present a.m. lines confirm the chain has its followers, as do the likes of Dunkin' Donuts and McDonald's during the morning rush. Starbucks has been overhauling its food and offering more premium drinks in its mainstream shops. But Princi is definitely aimed at diners willing to spend a bit more. It uses dozens of ingredients imported from Italy as well as local produce, all of which cost more to prepare.
Breakfast sandwiches at a Starbucks just across the street from the new Princi cost about $3.45 to $3.95. At Princi, breakfast sandwiches served on cornetti, focaccia, or brioche, are $7. Some dishes, like an $8.50 baked eggs breakfast dish called "Eggs in Purgatory" are made to order, and take longer to prepare. Coffee is also higher-end and higher priced. A grande coffee at the Starbucks just steps away is $2.45. At Princi, a 16-ounce cup of the Princi blend is $4. Still, lunchtime salads, sandwiches, soups and pizzas, priced from $5 to $9.75, seem in line with or less expensive than some nearby restaurants.
The brick walls and large windows that overlook the street corner and some outdoor seating give Princi's space a laid-back, yet high-end vibe. "It's not trying to be formal," says Giray.
With beers starting at $6, wines starting at $7 and $10 cocktails, in a city where higher double-digit prices for some drinks are increasingly common, the price points seem approachable.
And there's an "Apertivo hour" deal. Anyone who orders an alcoholic drink at the Princi bar, which serves beers and wines from Italy and Italian cocktails such as the Aperol Spritz, gets a complimentary tasting plate with samples of three kinds of pizza from 5 p.m. to 7 p.m. The same deal exists in Seattle from 4 p.m. to 6 p.m, but Starbucks said it noticed that people in the Windy City tend to work slightly later hours than their Emerald City counterparts.
Location, location, location
The Chicago outpost of Princi opens just seven weeks after the first one opened in Starbucks' hometown of Seattle (2118 Westlake Ave.). A New York location, at 51st and Broadway, is set to open sometime this fall.
The Princi shop in Chicago is located at 1000 W. Randolph Street, at the corner of Morgan Street, on what's been dubbed Chicago's Restaurant Row due to the presence of hit restaurants such as The Girl and the Goat, which is just a few blocks away. It's across the street from a mainstream Starbucks, diagonal from premium coffee shop La Colombe, and steps from McDonald's new headquarters.
It's too early to say what the best-sellers are at the first U.S. Princi, in Seattle. Giray slyly dodged the question while visiting Chicago. He'd only say that "a little bit of everything" is doing well and that the shop gets plenty of patrons morning, noon and night.
Chicago, in many ways, is a second city for Starbucks
Chicago has long been a testing ground for Starbucks. After opening shops in Seattle, Starbucks headed to Vancouver in 1987, and Chicago that same year. The first Chicago Starbucks opened on an ominous date: Oct. 19, 1987, otherwise known as Black Monday, the day of a major stock market crash. Starbucks has held strong in the Second City, where it now has about 130 locations.
Starbucks has tested other ideas in Chicago, including being an early market for Via instant coffee packets in 2009, and for its Mercato lunch menu a few years later. Next year, Chicago gets one of the first Reserve Roastery locations.
Not everything is a hit, though. Chicago was the third stop for the coffee chain's Teavana Fine Teas + Tea Bar. Starbucks opened the higher-end shop on Chicago's Southport Ave. in 2014, following 2013 openings in New York and Seattle, all meant to bring the mall-based chain more into the sit-and-sip culture. Back then, Starbucks envisioned having hundreds of the higher-end tea shops worldwide. But tea hasn't been the hit for Starbucks that coffee has been: that Chicago shop closed in 2015, and by July 2017 Starbucks said it would close the remaining Teavana stores.
Starbucks Rewards members can earn those stars (but there's a catch)
There are hints to Princi's ties to Starbucks in the store, such as the "Starbucks Reserve" wording on bags of Princi blend coffee and on the shop's espresso machines. But the Princi name is the one seen on cups, plates, menus and other materials. There's even a larger-than-life image of Rocco Princi on one of the walls. In one way, it's still a Starbucks, as members of the company's rewards program can earn their points, or stars, with purchases at Princi. Giray confirmed one exception: there are no stars given for purchases of alcohol.
Roastery on the way
Chicago will soon to be home to another premium Starbucks shop. The Chicago Reserve Roastery is set to open in 2019, at 646 N. Michigan Ave., where a multi-story Crate & Barrel was for years. The Roastery will also serve the Princi food, as do Roastery locations in Seattle and Shanghai, and the latest one, which opened earlier this month in Milan.
In Chicago, much of the food comes from a nearby commissary and is then finished on site at the shop. Dough, for example, is proofed and baked at Princi. And sandwiches, pizzas and other dishes are made just behind a glass divider. Last week, days before the opening, Princi himself was showing staff how to thinly slice prosciutto for a breakfast sandwich.