Coffee bars are here to stay
Friday, July 10th, 2009Ten Coffee Republic outlets owned outright by the chain are to close, following the company’s collapse into administration earlier this week.
This has prompted some retail analysts to question whether the future of the ‘latte revolution’ is over. The problems that Starbucks have had with many of their international operations, cutting 7000 jobs and closing of all their Australian outlets, have been widely reported as a direct effect of the recession.
But on closer analysis, we find that the total number of coffee bars has actually increased by around 300 across the whole of the UK over the last year. Café Nero is doing a rollicking trade. Tiny chains are also expanding. Restaurateur Fiona Hamilton bought the Beanscene coffee chain out of administration in 2008 and has already announced plans to double the current 12 outlets.
Even Starbucks aren’t faring too badly in the UK, noting only a slight drop in sales.
Coffee Republic, run by the brother and sister partnership of Bobby and Sahar Hashemi, badly managed its franchise expansion programme, which was rolled out too fast without the necessary controls.
Other chains are finding no wane in the public’s appetite for a strong cappuccino, which seems to be one staple people don’t feel the need to cut back on. A coffee out makes people feel better, but as successful operators know, it has to be good. Furthermore, coffee house operators are finding this a good time to be renegotiating landlord leases.
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