Rising gas demand in the EU countries, which have been imposing sanctions on their main provider, Russia, on the back of the Ukraine war, has ... prompted Egypt on the other side of the Mediterranean to boost its LNG exports. Yet, its high domestic consumption and possibly insufficient infrastructure remain stumbling blocks.
Rand Capital is the custodian of the Starbucks licence in Southern Africa.
Plans are underway to open Cape Town’s first Starbucks outlet in December at the high-end Canal Walk Shopping Centre. The initial date was June 2020, but Covid-19 pushed it back.
The pandemic has created a tough backdrop for the new licensee.
Taste Holdings — which also licensed Domino’s Pizza in 2014 — had tried and failed to establish the US brand in South Africa in 2019, and eventually sold up in October.
Rand Capital undeterred.
Rand Capital has secured leases for five locations in the Western Cape, the coastal province that is home to Cape Town and the Stellenbosch winelands.
“We are … seeking additional suitable sites with our partner landlords, who have been prepared to invest alongside us during these economically challenging times, with an eye on aiding in the country’s recovery,” says the Rand Capital Coffee CEO.
Cape Town, also fondly referred to as the Mother City, is a scenic city known for its beautiful botanical gardens and a well-entrenched coffee culture. This makes it a competitive market.
A custom experience
But Maizey welcomes the challenge in Cape Town and beyond. “While Cape Town is the headline, we are expanding in Gauteng and intend to bring the offering to all countries in Southern African,” he notes.
When Rand Capital decided to make a foray into the Western Cape: “Our objective was to set a positive tone, to indicate confidence in …, Cape Town, and the community in which we were seeking to invest,” says Maizey.
In Johannesburg, Starbucks has outlets in Rosebank, a leafy suburb and emerging business district; and Sandton City Shopping Centre, situated in the main business district.
“Our success in South Africa is largely dependent on our ability, as local operators, to customise the experience, offering and business model for the local market,” he explains.
But, “we are under no illusion that there is any other way to succeed in South Africa in general or Cape Town in particular,” adds Maizey.
The Covid-19 crisis prompted lease renegotiations and delayed the Cape Town opening.
“The terms were structured to address the post-Covid period of uncertainty, thereby allowing us to move forward with multimillion-rand investments,” he says.
“For the landlords, … [the renegotiations] allowed them to secure a long-term anchor tenant. The lease structures better align both parties,” according to Maizey.
Building blocks of Mother City enterprise
The investment in Cape Town, given its distance from Gauteng, is both material and complex, says the CEO.
There are many considerations that come into play before Starbucks partners – employees – serve customers beverages such as cappuccinos and frappuccinos.
The coffee beans have to sourced “sustainably and responsibly”. Then the coffee beans are roasted in Europe, shipped to South Africa, delivered to the company’s warehouse and, finally, land in the respective stores.
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This is not only a time-intensive exercise, it is also expensive.
“In our stores, which cost several million rand, we invest vast amounts hiring and training our partners – our baristas – on how to combine ingredients to create that ideal drink for you,” Maizey explained.
“For Cape Town, we are investing in a local supply chain, a local distribution centre, securing the leases, building the stores, hiring the partners, training the partners – which involves months of training up north – and so on. It is a significant commitment,” he says.
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