A little over 13 months since it opened its first store in Joburg, Starbucks South Africa has announced plans to expand its presence by opening stores in Cape Town and Durban in 2017.
JSE-listed Taste Holdings announced in July 2015 that it had secured the rights to open full-format Starbucks stores in South Africa. And in April last year, the group launched its first store in Rosebank, Joburg. It has since opened three additional stores, in Mall of Africa, and two stores in Menlyn Maine and Menlyn Park, Pretoria.
“We plan on opening eight to 10 outlets this year, including expansion to Cape Town and
Durban, a format located in a corporate office and ideally a drive thru format as well,” said Taste Holdings in a statement on Monday.
The group noted that although stores are individually profitable, the brand as a whole is projected to start to break-even at a core level only after its fifth store has been opened.
The company as also launched its globally popular rewards programme locally, in February, allowing customers to redeem rewards for their purchases, and also pay at select stores through the Starbucks mobile app.
“The early response to the launch was expected, but more pleasing is the natural rhythm of people you will see in our stores. Customer response to Starbucks Rewards has been well ahead of expectations with 9% of transactions already being paid with using Starbucks Rewards,” the company said.
The company also recently introduced Nespresso compatible pods, which Taste said has “exceeded our expectations”.
Taste hopes that its Starbucks brand will help the company return to profitability in 2017, after it reported a headline loss per share of 25 cents for the year ended February 2017, on Monday.
And while core revenue improved 7% to R1.08 billion, the company reported an operating loss of R110.7 million.
Brands with Taste’s food division include Maxi’s, Domino’s Pizza, The Fish & Chip Co, and Zebro’s.
The company also operates in the luxury goods market in SA with brands including Arthur Kaplan, NWJ, and World’s Finest Watches.
Taste Holdings’ CEO Carlo Gonzaga, said: “With the launch of Starbucks under our belt we now have an evidence-based view of the potential of the business, both in operating metrics and as an investment case. In the long run the investment case is attractive enough, that it, combined with the Domino’s improvements, caused us to review the divisional structure of the business.
“This review, with the new information at hand, has led us to the strategic decision to sell the luxury goods business in order to singularly focus on food and the long runway of opportunities that exist.”