JSE-listed Taste Holdings, which owns the South African licence for Starbucks and Domino's Pizza, has gone back to the drawing board when it comes to the iconic coffee brand. The bottom line, according to CEO Dylan Pienaar, is to avoid the mistakes of the initial roll-out. Expect smaller stores in the future and franchise openings in Cape Town with an eye to Bloemfontein and Port Elizabeth.
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.
There is even evidence that upper-income South Africans are feeling the pinch. According to the latest Old Mutual Savings and Investment Monitor survey:
"Lower-income households are under the most pressure, but it is certainly significant that middle- to upper-income families are showing higher levels of financial stress as well."
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...