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Duck confit? Starbucks buys into 'fast casual'

At 7 a.m. Thursday in a trendy neighborhood near Hollywood, across the street from an Orchard Supply Hardware and a massive sculpture of Vladimir Lenin, Starbucks stepped outside its comfort zone. Again.

This is where the coffee giant is opening the La Boulange restaurant, its first foray into the fast growing fast casual segment. Starbucks bought the San Francisco bakery chain two years ago for $100 million, but unlike the original stores in the Bay Area, this new La Boulange restaurant has a greater variety of food, stays open until 10 p.m. and serves alcohol.

"I couldn't let anybody in before me," said Simone Joseph, who was first in line. Joseph said she was also the first customer at the original La Boulange bakery store in San Francisco in the '90s. As for the newer offerings in the Los Angeles restaurant, Joseph was gushing. "I'm so happy that I tasted my first raisin swirl with custard cream that I was waiting for, and a very hot cappuccino."

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Although you can't find the menu for the new restaurant online, it is quite different from the original menu still used in the Bay Area.

For example, in the new restaurant, there are fewer sandwiches, but La Boulange is introducing a line of burgers, like the Super Bon (cheddar, bacon, avocado, onion strings, fried egg, aioli) which can be served on a croissant bun. The big new breakfast item is the Duck Confit Hash — two eggs over easy, duck confit, La Boulange potatoes, arugula, onions and toasted bread. It weighs in at 810 calories and costs $10.95. This reporter sampled the meal, which was balanced and fresh, but very heavy. I could only eat half of it.

Customers at Starbucks' new La Boulange restaurant.
Jane Wells | CNBC
Customers at Starbucks' new La Boulange restaurant.

There are also new sides like Parmesan Truffle fries, "super thick shakes," which come in flavors like Chocolate Ganache and PB&J. Cocktails — new for Starbucks, which is only serving wine and beer in some stores — include a few drinks using soju, a Korean vodka. The Kick Starter ($6.95!) is made of soju, espresso, and sweetened condensed milk, and the Bloody Marie ($7.95!) is made of soju, Dijon, veggie bouillon with cornichon and olives.

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Nearly every restaurant chain in the country is scrambling to get into the fast casual segment, which Technomic said grew 11 percent last year and now has 15 percent market share. "It's really become the sweet spot of the restaurant space, where you have the ability to charge premium prices over what you find in the quick service space, but also lower cost than you typically find at casual dining spaces," said Morningstar analyst R.J. Hottovy.

During a test run of the store earlier this week, customers enjoyed a variety of sandwiches,burgers, and salads, along with those immense milkshakes. A handful of them posted reviews on Yelp. Starbucks reported La Boulange products have boosted sales in its core stores, and it chose Los Angeles for the first full scale La Boulange restaurant because "Los Angeles has a vibrant food scene."

Finally, the new restaurant will not have any Starbucks branding, though there is a special Café Maison coffee, which Starbucks created exclusively for La Boulange. Customers can also use their Starbucks rewards card here. A spokesperson said there are no plans at the moment to open a second restaurant, but Hottovy thinks that if the concept works, "within five years we could potentially see maybe a few hundred locations of La Boulange across the country."

Simone Joseph wishes the store would change one thing, however. "Can you open at 6 a.m.?"

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