4 September 2018 | New Zealand

Starbucks and Restaurant Brands part ways in New Zealand

New investment firm is established to secure Starbucks’ 22-store portfolio for approximately US$2.9m after Restaurant Brands declines to renew two-decade old franchise license
A Starbucks store in Christchurch, New Zealand

Photo Credit: Thomas Wojcik



Restaurant Brands has declined renew its franchise license for Starbucks in New Zealand, citing the coffee shop chain as becoming “less relevant” to its business strategy. Starbucks will not, however, have to look far for a new partner after new investment firm, Tahua Capital, was rapidly assembled to purchase the coffee chain’s 22-store portfolio for a reported US$2.9m.

Under the terms of the deal, which has yet to be finalised, Tahua will seek to secure all Starbucks leases from Restaurant Brands in New Zealand with the retention of around 300 existing staff.

The world’s biggest coffee shop has made limited progress in New Zealand’s coffee shop market since arriving in 1998. Operating just 22 stores across the country, it has faced stiff competition from an entrenched and vibrant independent coffee shop scene with a loyal and artisan focussed customer base.

"While the Starbucks business had provided a steady contribution to the group over a number of years, it was becoming less relevant to the company's overall direction as it looked to further expand its core quick service restaurant brands in New Zealand and overseas,” said Restaurant Brands Chairman, Ted van Arkel, in a press statement.

Restaurant Brands franchises a number food-focused brands, such as KFC and Pizza Hut in New Zealand. However, the Starbucks business accounts for less than 4% of their total sales, with the food and beverage franchise group estimating the exit would impact revenues net profit by around NZ$1.3m (US$859,000).

Commenting on the new franchise deal with Starbucks, Tahua Capital chief executive Charles Belcher said his firm would work with Starbucks to create a "bright future" for the coffee chain in New Zealand.

"Both Tahua and Starbucks share similar values about high-quality coffee, engaged partners [and] employees. and a passion to create positive change in the communities they serve," he added. 

The world’s biggest coffee shop chain has encountered similar trading difficulties in Australia, closing the majority of its stores nationally over the last ten years and currently operating just 34 sites in Sydney, Brisbane, the Gold Coast and Melbourne.

New Zealand’s domestic independent and coffee shop chains often command fiercely loyal customer bases, with many consumers preferencing artisan coffee concepts such as single origin, roasting profiles and brewing methods, such as pourover.

In August 2018, global franchise firm, Cooks Global Foods, entered into a provisional agreement to acquire New Zealand-based 3rd Wave boutique chain, Mojo, for approximately US$12.6m. Cooks, which already owns the master franchise to Esquires Coffee in 14 international markets, is seeking to expand Mojo in the US.
 

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