The La Boulange Sale: Or, an End of Multiplier Effects

La Boulange Hayes Valley, photo courtesy of Inside Scoop

News broke yesterday that SF-based bakery-chain La Boulange had sold to Starbucks for a cool $100 million. While it appears that this deal may have been in the works it still comes as something of a surprise, and a disappointing one. 

See, while I never particularly appreciated La Boulange (their baked goods are only alright, and their coffee is about the same), I did enjoy the fact that they supplied jobs and reinvested in the SF Bay Area. Their coffee came from a respectable local roaster, and they were known for supporting any number of local nonprofits, institutions, and food pantries. Most important, though, is that in keeping their profits reinvested locally, they did a boon for multiplier effects in SF, assisting real economic growth, the tax base, and the like. 

Now that's no more. With the company being directly owned by Starbucks Corp, any profits derived by the company now head into the general reinvestment of all names and brands owned by the company. While it is still uncertain, local contracts for coffee or other services may be annulled to be given to in-house vendors, hitting companies and vendors they had been using particularly hard (due to their scope in the local market). It also will hit the neighborhoods -- Noe & Hayes Valley in particular -- because suddenly theres a very national presence in the neighborhood that didn't exist before, reducing novelty and perhaps undercutting other businesses (as landlords can project the ability of other corporate clients to pay higher rents in the area). 

Perhaps most importantly, this story is the telling one of any company seeking "growth". A number of recent investments, acquisitions and buy-outs of particular small-scale/growing companies is yielding uncertainty about how dedicated they will be to any number of factors -- their customer base, their suppliers, or in the cases I'm more familiar with, their coffee farmers and quality of roasting. And having investigated and seen a number of acquisitions over time, its very easy to be skeptical; unlike Silicon Valley tech acquisitions and mergers, food & beverage acquisition, especially where the organic / local / sustainable food movement is concerned, has attempted to grow and present alternatives to the supply chain and production models of mainstay agriculture; ingredients & supply chains, unlike code and programmers, are not simply one-sided inputs. And to see La Boulange move in that direction is another strike against this type of growth*.

*A note, again: Growth takes a lot of forms, and indeed, the difficulty of monetizing effectively to reach goals for growth are very difficult, especially in the agriculture and food markets of today. That said, creative growth has worked in a number of cases, and there are still regional & national brands who managed to do so while not sacrificing the values and very material benefits they provided when they were smaller. It behooves all small businesses and people planning sustainable-ag related projects to think in business terms; we need to grow and become more accessible so that we become the mainstream/the mainstream moves to us/whatever. But to simply let go or give leeway to investors for whom profit motive is the first and primary consideration does no help for anyone, least of all the people who got you there.