Starbucks opens seventh store in Melrose Arch
Taste Holdings, the operator of Starbucks in South Africa, has opened up its seventh Starbucks store in Melrose Arch, Johannesburg on Tuesday.
Earlier this month, Taste reported a 9% decline in revenue for the six months ended August 2017, to R483 million, while losses widened to R65.8 million, from R34.4 million before.
Bloomberg reported that on top of an impending 2019 deadline to repay R225 million of bond debt, Taste needs to keep opening Starbucks stores to offset initial start-up costs.
There are “a number of options, a mix of equity and debt, and I think we will resolve all that and finalize the valuation of the proposals in the next four weeks,” CEO Carlo Ferdinando Gonzaga told Bloomberg.
Having secured the rights to Starbucks outlets in South Africa in July 2015, Taste now has seven stores with plans to open three more this year – two of which will launch in Durban.
The total of 10 is at the lower end of management estimates, the CEO said, as the company takes a conservative approach to openings amid the need to raise money.
While the individual Starbucks stores are profitable, “the challenge now is to grow those stores and to keep on opening in profitable locations to the point that there are enough to cover the overheads,” Gonzaga said.
“So it’s less about a trading problem than it is about an opening store problem, which then has a capital requirement.” It costs Taste about R5 million rand to R6 million to open a store, the CEO said.
Welcome to giving us Instagrammable pics & of course great coffee & treats!
Meet us at Starbucks ⭐️☕️#StarbucksMelrose #StarbucksCoffee pic.twitter.com/5j9neuJGCh
— Likers Of Things (@Likers_2Do) October 24, 2017
https://twitter.com/Tiffany_nlx/status/922736561975947264
Taste said earlier this month that Starbucks will make its long-awaited debut in Durban in November 2017.
The group said that it will open two new stores in eThekwini, the first of which will launch on Durban’s iconic Florida Road, with another being set up in the Gateway shopping centre.
Speaking to BusinessTech earlier this month, Gonzaga said that this will be followed by the launch of a store in Johannesburg in the Melrose Arch Precinct before the end of 2017.
He further confirmed that the chain was actively looking at suitable sites to open new stores, “looking to double our store footprint in 2018,” he said.
“This will include additional stores in Gauteng, KZN and the first Cape Town store,” he said.
Read: Starbucks rollout in South Africa hit by ‘brutal decline in consumer spending’
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