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Coffee City

Melissa Allison follows the world's biggest coffee-shop chain and other Seattle caffeine purveyors.

June 5, 2009 at 3:28 PM

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Starbucks' revamped food program shaves costs, sparks lawsuit from longtime bakery supplier

Posted by Melissa Allison

In revamping its food offerings to include tastier, healthier options, Starbucks also cut the number of bakeries it uses nationally and shaved its food costs.

"We revised about 90 percent of our bakery recipes to do this," said Sandy Stark, vice president of global food for Starbucks. The new program launches June 30 with items that are free of high-fructose corn syrup and artificial flavors.

About 16 percent of sales at Starbucks' company-operated U.S. stores last year came from food.

The coffee chain also worked with suppliers to come up with ingredients popular with customers, like tart Michigan cherries for an apple bran muffin that debuted last fall and Oregon blueberries for a new blueberry streusel muffin that arrives in U.S. stores this month.

Among other things, it will add new salads, a fat-free cherry yogurt parfait and start using egg whites instead of cholesterol-free eggs in its reduced fat turkey bacon sandwich and spinach feta wrap.

Overall, the program is simpler, which means fewer bakeries and lower costs, Stark said. She declined to say how many bakeries Starbucks uses, but said they are scattered across the country.

One of the chain's longtime bakery suppliers, Crestone Group in San Diego, learned in February that it's not part of the new program and last month sued Starbucks, saying the coffee company owes it more than $2 million for breaching supplier agreements.

It has supplied baked goods to Starbucks in Southern California for more than 12 years, and expanded later to supply stores in Colorado and Texas, according to the lawsuit filed May 22 in U.S. District Court in Southern California.

Crestone also alleges that Starbucks has used its proprietary recipes in a new frozen baked goods program.

Starbucks said this year it "would be replacing fresh baked goods supplied by regional bakeries, with frozen baked goods which are produced in large quantities from a small number of high- volume frozen vendors," the lawsuit says.

Like many companies, Starbucks has always sold some baked goods that are flash frozen shortly after they are baked. Stark declined to say whether the new program will include more baked goods that have been frozen. Starbucks declined to comment on the lawsuit, as did Crestone's in-house attorney, Elizabeth Burnett.

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