Now is probably not the best time to be in the South African food and retail space. Consumers are tightening their belts, business confidence is low and the economy contracted a whopping 3.2% in the first quarter.
But even when times are tough, South Africa’s more affluent classes are hardly going to ditch their espresso-based lattes for instant coffee. So one would expect that Starbucks could make a go of it here — South Africa does have a class that likes to sit in cafes in front of a laptop. But Starbucks initial move into this market has been widely seen, up to this point, as something of a flop.
A new store is opening in Fourways in August and Taste has its eyes on Cape Town, an obvious destination for a global brand in the South African market. The Waterfront is the first choice and Pienaar said it was keen to have Starbucks there, but it is a difficult place to get into. Beyond that, Pienaar said the brand could expand into untapped markets such as Bloemfontein and Port Elizabeth, but in “a concerted effort to open up three or four stores in a few months to validate that market”.The stores will be smaller to reduce the capex spend. The 12 already in operation have cost on average R6.5-million each to set up, with the flagship Rosebank store, which opened to much fanfare in 2016, coming in at about R10-million.
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