Starbucks to Make Italian Debut With Upscale Roastery Cafe

(Bloomberg) -- Starbucks Corp., setting up shop in Italy for the first time, will open a Roastery location in Milan next year, turning to its upscale brand to gain a foothold in the country that birthed espresso.

The 25,500-square-foot (2,370-square-meter) retail space will open in a historic post office in the city’s center in late 2018, about a year later than Starbucks had planned to enter the Italian market. The store will feature small-batch coffees as well as products from Italian baker Rocco Princi, the exclusive food provider for new Roasteries globally. It will also serve alcohol.

“Coming to Italy -- strategically, it’s not the biggest market in the world,” Chief Executive Officer Howard Schultz said in an interview with Bloomberg Television’s Francine Lacqua in Milan. “But it’s the most important market for me personally and for the company. Why? Because the Italians mastered coffee way before Starbucks.”

After the Milan venue opens, Starbucks’ Italian licensee and business partner, Percassi, will open a small number of other stores in the city during the balance of 2018. The company also plans to expand to other locations in Italy.

When asked about how many stores are planned for the country, Schultz said in a separate briefing with reporters: “Our history has been 10 to 12 stores in the first year, and I think that’s a safe number.”

Espresso Culture

Schultz, who is stepping down as CEO in April, plans to focus on building out the Roastery chain -- which are bigger Starbucks that offer higher-end coffee and let customers sample the goods. The executive also is developing the company’s new Reserve brand, which includes coffee, cafes and Roastery locations. Chief Operating Officer Kevin Johnson will take over the CEO job.

Starbucks opened its first Roastery in Seattle in 2014. That location “has been labeled the Willy Wonka of coffee, and we’re going to take that and put it on steroids for the Italian experience,” Schultz said.

The Milan site will be the first Starbucks Roastery in Europe and the fifth globally. Starbucks said at its recent investor day that it plans to open 20 to 30 Roasteries around the world.

Three Decades

Schultz decided to build a coffee-shop chain after visiting Italy in 1983. Espresso bars have long been at the center of community life for Italians, who make it a daily ritual to sip -- usually standing up -- a short shot of espresso or a cappuccino as they discuss politics or soccer.

Starbucks said last year that it originally planned to open its first Italian outlet in 2017. When the company opens its Milan location next year it will face smaller challengers, such as Italian coffeemaker Illy, which have already drawn consumers away from local espresso bars.

“We’re not coming to Italy to teach the Italians how to make coffee,” Schultz said. “We’re coming to Italy to be a respectful servant of what the coffee culture has been and earn their respect along the way.”

Schultz also commented on topics including:

• Criticism from some European countries that the company isn’t paying enough taxes. “We paid 18 million pounds ($22.4 million) of tax last year in the U.K. I think that is emblematic of our commitment to do things the right way. We want to pay fair and equitable taxes 100 percent of the time.”
• China. “China is a fantastic market for us. I’ve said publicly that China probably will exceed the U.S. in terms of the number of stores. We haven’t said what year, but it will be bigger than the U.S. over time.”
• Stepping down as CEO. “I’m stepping down to do something quite exciting -- that is, to build an ultrapremium brand, Starbucks Reserve, build these Roasteries and, most importantly, enter Italy.”

--With assistance from Leslie Patton

To contact the reporters on this story: Dan Liefgreen in Milan at dliefgreen@bloomberg.net, Chiara Remondini in Milan at cremondini@bloomberg.net, Francine Lacqua in London at flacqua@bloomberg.net.

To contact the editors responsible for this story: Vidya Root at vroot@bloomberg.net, Nick Turner at nturner7@bloomberg.net, Lisa Wolfson