Taste Holdings, the operator of Starbucks in South Africa, has opened up its seventh Starbucks store in Melrose Arch, Johannesburg on Tuesday.<\/p>\n
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.<\/p>\n
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.<\/p>\n
There are \u201ca 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,\u201d CEO Carlo Ferdinando Gonzaga told Bloomberg.<\/p>\n
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.<\/p>\n
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.<\/p>\n
While the individual Starbucks stores are profitable, \u201cthe 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,\u201d Gonzaga said.<\/p>\n
\u201cSo it\u2019s less about a trading problem than it is about an opening store problem, which then has a capital requirement.\u201d It costs Taste about R5 million rand to R6 million to open a store, the CEO said.<\/p>\n
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