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Starbucks - disaster in South Africa

I was stunned to read how little Taste Holdings sold its 13 Starbucks stores for in South Africa.  They were paid only R7 million and they say that the launch store in Rosebank alone cost approximately R14 million to build, let alone what it cost to fit out all the other Starbucks branches around South Africa. 

I think that Starbucks is rather expensive by South African standards and it may well not have been positioned very well.  There is obviously also something to be said about having much smaller branches so that one pays a smaller rental.  Apparently, the shareholders of Taste had put in over R1 billion to fund the expansion of Domino’s Pizza and Starbucks and now the company has decided to get out of a losing business – so there are big losses all round for them.  Domino’s Pizza has had to buy back some of the franchises to the extent that now the company owns 58 out of the 81 stores according to an article I read. 

Posted by Michael de Broglio on Thursday 07-Nov-19 Share on Facebook   Tweet It

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Comments

Sinead  said:
on Thursday 12-Dec-19 09:18 AM
I have only been to Starbucks about 4 times.... They do make amazing drinks, but I am not really a coffee shop type of person.
I remember sitting at Starbucks one morning before work just watching everyone else go about their meeting preparations, getting their morning coffee before leaving for the office etc. Very interesting. The service was also really good.
Domino's I wasn't a fan of in the beginning, but of late, I enjoy their pizzas more than Romans.

Bianca Taljaard  said:
on Thursday 12-Dec-19 07:26 AM
Like all new businesses the hype only lasts for so long, most of the time you are only paying for the name.

Cornelie  said:
on Monday 09-Dec-19 10:04 AM
I have never tasted a star bucks coffee I dont think I will ill pay rather for a thin of coffee and make it in the comfort of my own home. Not a big coffee drinker . But i see alot of shops going down it is insane the amount of money a person need to pay for a shops rent etc.

Tamaryn  said:
on Tuesday 03-Dec-19 12:22 PM
Starbucks and Domino's Pizza have never been much of a drawcard for me. I'm surprised that either are still in South Africa. Neither offer anything special or different to what we already have in SA, basically it's another coffee shop and pizza place. There are already plenty and they all offer the same old thing at the end of the day. There is only so far a name can take you and if you don't do the consumer and location research properly, you're out.

Tersia  said:
on Monday 02-Dec-19 10:29 AM
I actually don't think that Starbucks is that expensive. If you look at the prices for a Latte and a muffin at for example Mugg & Bean, its actually the same. I do love Starbucks and I would say the one in Brooklyn has been positioned well. There are a lot of feet and people quickly moving by or even taking a minute to sit and have a quick cup before going to work.
The few times that I have been past the one in Rosebank they were always busy, but that is not always to say that you are doing well.

Lourien  said:
on Friday 29-Nov-19 03:27 PM
This is shocking, they spent so much money on start bucks, just to loose so much in the end, but facts are facts. Everyone wants to enjoy a nice coffee but it also needs to come at a reasonable price. If it was amazing and worth it I am sure they would have made a success but the market is very competitive.

Kathryn  said:
on Friday 29-Nov-19 02:45 PM
I agree with Helen, the Starbucks coffee in SA tastes completely different than overseas Starbucks where there are also so many other options for beverages in comparison to SA.

Dasanya  said:
on Thursday 28-Nov-19 05:19 PM
The opening of Starbucks was met with much excitement and hype but definitely overpriced. I look for affordability and there is a lot of competition in this market. I agree that Starbucks may not be a brand suited to South Africa.

Zindy  said:
on Thursday 28-Nov-19 10:58 AM
Everyone was excited when hearing Starbucks would be opening up. One coffee later, Two coffee later and the fuss is over. Its all about locality. There are many competitors around so people usually go to the more affordable places.

Thabitha  said:
on Thursday 28-Nov-19 07:40 AM
Not everyone is for coffee, in South Africa people prefer drinks than coffee and also pricing is what we look at before we can do anything nowadays cost cost

Zandelee  said:
on Thursday 28-Nov-19 06:46 AM
Starbucks coffee I personally consider to be way to expensive. I one time listened to a podcast on youtube how much money you can actually save in one year by not giving in to buying a cup of coffee at your local coffee shop and rather just making your own.

Brenda Du Toit   said:
on Tuesday 26-Nov-19 07:12 AM
This is interesting but I never had Starbucks before.I heard they are very Overpriced.

Dune  said:
on Monday 25-Nov-19 04:20 PM
I only have 1 cup of coffee a day, when I get up to kick start my day. I have had starbucks before however i do know a couple of places that can give them a run for their money. The same with Domino's Pizza i think they are completely over priced and i will.not go out of my way to buy pizza there. There are must better local franchises out there to support

Helen  said:
on Monday 25-Nov-19 01:36 PM
I love Starbucks coffee, I used to often visit different branches of Starbuck when I worked in USAI It was very nice and affordable coffee, but in South Africa it is very expensive,truly overpriced and taste different too.

Nicolle  said:
on Sunday 24-Nov-19 04:17 PM
Think about the fact that there is already an established coffee culture in South Africa, with cute, unique little cafés that have 1. Great and not mediocre coffee. 2. That is reasonably and not overpriced. Sure, when the brand launched the hype caught the interest of many, however, he novelty of the brand, bad coffee and price soon wore off.

Mathilda Du Preez  said:
on Thursday 21-Nov-19 07:08 AM
Overpriced and definitely not worth the hype.

Bronwyn  said:
on Tuesday 19-Nov-19 01:36 PM
Iam not a fan of coffee so, I have never been to a starbucks.

Kayla  said:
on Tuesday 19-Nov-19 08:34 AM
I have been a few times to Starbucks, it was very big about 3 years ago, you could not find an empty store, the lines used to stand. Their cappuccinos and frappacinos for me is quite enjoyable however it is quite expensive, I believe maybe because its an international coffee house. However now the excitement for it has died down.

Natasha  said:
on Monday 18-Nov-19 03:52 PM
I have never had Starbucks I think its overrating coffee is coffee why spend a fortune on coffee when you can just make yourself a cup of coffee I mean coffee is coffee all of them have caffeine in so normal coffee will also do the job.

Brumilde Cronje  said:
on Monday 18-Nov-19 10:25 AM
I think starbucks is very expensive. One can treat yourself once in a blue moon, but i wont stop there every morning for a cup of Joe. They should look at target marketing and advertise a bit more.

Angelique Jurgens  said:
on Thursday 14-Nov-19 11:44 AM
I agree with Shristi - their upkeep in Rosebank is shocking. Over priced coffee and really the hype died down after the first week. People prefer to have "drinks/cocktails" than a coffee date. When someone has asked me to coffee, we don't really ever go for coffee but rather drinks. A lot of American franchises don't do too well - it reminds me of Hardrock. Us South Africans join in on the hype but then go back to our brands like loyal customers.

Ashleigh  said:
on Thursday 14-Nov-19 09:30 AM
I havent even attempted a starbucks coffee shop because the name itself makes me nervous at the cost of its coffee's.

Clare  said:
on Thursday 14-Nov-19 09:11 AM
I have never had Starbucks ever, I actually don't even know where they are.. I do see them on movis and to me I think its all about the coffee right??? I love Coffee so I wanna try it.. I HOW EVER love Domino's pizza I was upset to know that the one we used to order from closed down..

Daniella  said:
on Monday 11-Nov-19 04:57 PM
I have had Starbucks once and all I can say about it is that it is overrated and over priced- Starbucks does well in countries that follow trends and need to fit in. whereas here in SA we spend money cautiously(not referring to the 1%) . Domino's however is not badly priced and tasty so essentially worth it.

Michelle D  said:
on Monday 11-Nov-19 03:44 PM
Starbucks is not the kind of business that will thrive here. It is overpriced coffee/not coffee and are marketed to people that have too much money and nothing else to spend it on. Dominos on the other hand I can get behind. Their pizzas are much better (and more consistent) than debonairs, they make it so easy to order and they have pizza specials all the time.

Melissa  said:
on Monday 11-Nov-19 03:12 PM
I am not really a fan of all sorts of fancy coffee's or whatsoever.....coffee is coffee. Don't really have any interest in Starbucks

Bianca N  said:
on Monday 11-Nov-19 10:47 AM
I have never had Starbucks, to be honest I don't really enjoy coffee so I never had any interest in visiting the shop, although I have heard that it is very expensive and I think that has a lot to do with why it did not succeed as expected. We have coffee places at our petrol stations like Seattle and Mugg n Bean which seem to do really well. I just don't think a lot of us are willing to pay that price for something that we can get at a fraction of the price somewhere else. And as for Domino's, the competition is so stiff considering we have Debonairs, Pizza Perfect, etc.

Henrietta  said:
on Monday 11-Nov-19 08:18 AM
I do love my coffee but only if i make it myself. I can't see myself spending a fortune on one cup of coffee when I don't even know if i like it. I already in my eyes spend a fortune on my coffee that i drink but at least it last me a few weeks. I am a huge fan of domino's though. Just love the way the pizza doughs are made.

Joyce  said:
on Friday 08-Nov-19 04:53 PM
I also don’t think South Africans are that interested in drinking coffee. I think the shareholders Taste Company did not researched enough before bringing the business to SA

Prishani  said:
on Friday 08-Nov-19 04:37 PM
This is interesting. I think they should have started out with smaller shops. I don't think South Africans have taken much to the brand. It may also have something to do with the price.

Alexis  said:
on Friday 08-Nov-19 04:23 PM
I had it once, and did not really enjoy it too much. Maybe too much of a hype was put on it, but i am not in a rush to go back and get another one. It's the same as Burger King for me - I am not a huge fan.

Michelle Smillie  said:
on Friday 08-Nov-19 02:59 PM
I think the problem is the competing franchises. Domino's is not popular next to Roman's and Debonair's, for example, and Starbucks has to compete with favourites like Mugg and Bean, Ciro and TribeCa. And, like you said, it's a bit expensive over here.

Sarah  said:
on Friday 08-Nov-19 11:59 AM
I haven't gone to either of those two places. I knew they would not work out in South Africa . Our economic is very bad for investors right now

Megan  said:
on Friday 08-Nov-19 08:13 AM
I don't think South Africans drink coffee the way Americans do... I mean I only go to Starbucks for the cold drinks they serve not even the coffee. I think South Africans are more concerned with food rather than upmarket coffee bars, its one photo here for social media then the fad is over.

Jadine Richards   said:
on Friday 08-Nov-19 07:32 AM
I am not a fan of pizza in general so I haven't indulged in domino's but surprisingly I also haven't had Starbucks in South Africa. I do go to Starbucks when I am in other countries but not here. Its strange and to be honest I wouldn't even be able to tell you where a Starbucks is.

Thembi  said:
on Thursday 07-Nov-19 03:11 PM
Domino's pizza is very nice but starbucks I didn't go there yet.

Victoria  said:
on Thursday 07-Nov-19 10:37 AM
I know of a lot of people who don't like Starbucks, people prefer Vida Cafe or Seattle Coffee. I have tried Domino's Pizza when it first came to South Africa and there pizza was really good.

Claudia B  said:
on Thursday 07-Nov-19 08:54 AM
Never had Domino's Pizza, had Starbucks and I liked it, never had a problem with them before.

Roxanne  said:
on Thursday 07-Nov-19 08:40 AM
I haven't been to either of these places so cant really comment on their product and prices

Jolene   said:
on Thursday 07-Nov-19 08:35 AM
I must say I was also quite surprised when I heard what Starbucks were sold for, I actually thought I heard wrong. I’m not a fan of Starbucks, I had it once or twice before but wasn’t impressed at all. Domino's, also don’t like their pizza.

Ziyanda  said:
on Thursday 07-Nov-19 08:33 AM
I am not a fan of Domino's Pizza but would really love to go to Starbucks.

Shristi  said:
on Thursday 07-Nov-19 08:14 AM
I used to love Starbucks until my recent experience.I recently walked into the Starbucks in Rosebank and was stunned by how terrible the upkeep of the store was..The tables were not clean, flies everywhere etc.. I have noticed that their standards are dropping which could be the reason as to why they are not doing that well anymore..

Courtney  said:
on Thursday 07-Nov-19 07:43 AM
I can't stand domino's Pizza.
I also haven't tried Starbucks coffee as yet.

sandra  said:
on Thursday 07-Nov-19 07:31 AM
I have read a recent article that said that setting up a new Starbucks store in South Africa costs between R5 million to R8 million. Where Starbucks competitor Vida e Caffè, says the average cost of setting up one of its stores is only around R1.5 million. Prices in Vida e Caffe are expensive, but less than compared to Starbucks. Starbucks is too pricey and overrated and if they seek to make profits here in South Africa, I highly recommend that they sell their products for a cheaper price to build up their clientelle.

david  said:
on Thursday 07-Nov-19 07:21 AM
sorry for the SA investors.

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Johannesburg based attorney specializing in personal injury matters including Road Accident Fund claims and medical negligence matters. My interests include golf, reading and the internet and the way it is constantly developing. I have a passion for life and a desire for less stress!
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