Exclusive: New owner plans to open 10 stores in SA over the next nine months, in defiance of the lockdown’s impact on the economy and restrictions on food & beverage outlets
ý A cup of coffee is not classified as an essential good. And relaxing at a coffee shop still won’t be possible under level 3 of the Covid-19 lockdown.
But that isn’t stopping Starbucks. The owner of the global coffee franchise in SA is throwing caution to the wind with a plan to open 10 new stores within nine months, despite Covid-19 and the restrictions on food outlets.
Until now Starbucks outlets have been opened only in superregional malls but the new owner of the chain in SA, Rand Capital Coffee, wants to get the brand into neighbourhood shopping centres, petrol stations and possibly even airports.
Adrian Maizey, founder of the Rand Group, says SA has a culture of gathering to enjoy a well-made cup of coffee with friends and Starbucks would like to position itself as a neighbourhood brand even if there is a perception that it is a high-end indulgence.
“The perception is that this is an expensive brand given the depth of selection as well as the design of our stores. But our studies show that a cup of our coffee is about R1 less than Woolworths coffee,” he says.
Rand Capital Coffee bought all 13 Starbucks stores and the master franchise licence for SA from Taste
ed in its success.”
Maizey means that literally. He has put his own money into the business.
But it hasn’t been smooth sailing. The cost of fixing the business has been high.
“To date, we have paid north of R30m for the business. That amount continues to increase as we settle supplier debts incurred prior to our ownership that are coming to light. In good faith, we are paying those prior supplier debts so that those suppliers can continue to best serve us,” he says.
Rand Capital Coffee has received some rental relief from its landlords. Hyprop Investments, owner of the Rosebank Mall, says Starbucks is receiving rental relief until it can trade again, which is expected to be only once the lockdown has been eased to level 1.
While some restaurants have been able to deliver coffee under level 4, Starbucks hasn’t done so. The brand’s customer experience in SA is linked to drinking the coffee on the premises, while relaxing with friends or using the free
Wi-fi.
Maizey seeks to allay fears that the pandemic will scupper his plans for Starbucks.
He says existing and future store formats are being adapted to fit a post-covid world with its expected changes in consumer behaviour. Starbucks Corp in the US is also providing strategic input.
David Shapiro from Sasfin Securities says Starbucks is a wellfollowed brand, which justifies a renewed attempt to make it work in SA. “I think it depends on how they position the brand in SA. Starbucks is expanding aggressively in China.”
Shapiro says Starbucks can do well if it becomes an on-the-go, takeaway coffee brand. However, this will mean changing its strategy in SA.
We believe Starbucks is a global brand which requires focus to get right in a new developing market like SA