01/09/2012 02:09 EST | Updated 03/10/2012 05:12 EST

Starbucks Cancels Contract With Burnaby Bakery


A Burnaby, B.C., bakery says Starbucks has cancelled its long-term contract because the coffee giant now supplies stores across Canada with frozen baked goods.

For 17 years, Monte Cristo Bakery supplied baked goods like scones, loaves and croissants to Starbucks outlets in the Lower Mainland and Vancouver Island.

Company president Karim Nathoo said the relationship was terminated a few weeks ago.

"It's been a great loss," he said. "We've reduced our staff by 50 people, we've put some people on part time ... When you lose a big client like that, obviously it's going to hurt you."

Nathoo said Starbucks told him the company has centralized its baking.

"At some point in time, they decided to consolidate their suppliers. They've gone to one supplier, I believe, and maybe getting some stuff from the [United] States as well that is frozen and supplied to all of Canada," he said.

"The muffins that they get, the bars that they get, the loaves — all frozen. Cost is obviously a big part for Starbucks, so they have chosen a route that would make more economic sense for them."

Starbucks declined to comment when contacted by CBC News.