Smaller stores and supermarket kiosks have enabled Starbucks to revive stalled outlet growth in South Africa
An artist's impression of a Starbucks kiosk at a FreshX supermarket | Photo credit: Shoprite Holdings
Rand Capital Coffee has hailed Starbucks South Africa as bucking a flat economy and pandemic lockdowns to press ahead with expansion across the country. Praising South Africa’s ‘hearty appetite’ for coffee, Rand Capital Coffee said it has exceeded its target to open 30 new stores by 2022.
Despite ‘macro interruptions’, which included the pandemic and related lockdowns, looting and a metal workers strike, the company said it was ‘way ahead of schedule’ and had opened 41 outlets by the end of December 2021, taking its total 54 locations across the country.
In a press release Rand Capital Coffee
CEO Adrian Maizey outlined how a change in strategy from opening larger stores to smaller kiosk-format locations had been a key factor in Starbucks renewed momentum in South Africa.
“The new Starbucks kiosks in the FreshX supermarkets is a perfect partnership for us. It helps extend the Starbucks offering into regions and neighbourhoods where we otherwise might not be able to reach and gives us access to their incredible leadership and innovation,” Maizy said.
Rand Capital Coffee acquired a 13-store portfolio from previous Starbucks licensees, Taste Holdings
, for around ZAR7m (US$445k) in late 2019.
Taste was granted an exclusive 25-year licence to open stores in South Africa in 2015. However, despite Taste forecasting 200 South African stores by 2020, the company announced it would cease opening new Starbucks stores due to insufficient capital, citing challenges with the coffee chain’s higher price point.
Rand Capital Coffee’s pivot towards smaller stores to expedite growth echoes Starbucks strategy in India, where the Seattle-based coffee chain operates around 240 stores as part of a joint venture with domestic conglomerate Tata.
In October 2021 Tata Starbucks said it intended to accelerate store openings by focusing on smaller format stores and drive-through locations
. That strategy appears to be yielding positive results, with coffee chain reporting 120% year-on-year revenue growth in the second quarter of its 2022 financial year and its entrance into nine new Indian cities including Jaipur, Kanpur, Indore, Ludhiana, Kochi and Amritsar.