Starbucks gives Taste reason to cheer

Photographer: Jessica Tennant

Speaking after the release of results to end-February on Wednesday, Taste CEO Carlo Gonzaga said only one more Starbucks outlet would be opened this calendar year, after the recent opening of the first two outlets in Rosebank and at the Mall of Africa in Midrand.

"We don’t have to ramp up the expansion of Starbucks at any cost. We said we would open 20 stores in two years, and we are working on the capabilities to do this."

Gonzaga predicted that Taste would reach breakeven on Starbucks at ebitda (earnings before interest, taxation, depreciation and amortisation) after five stores were up and running.

The launch of the first two Starbucks stores exceeded the company’s wildest expectations.

"Four weeks later and there are still queues on weekends," he said.

In the year to end-February Taste’s core revenue surged 41% to R1bn with "system-wide sales" up 9% to R1.72bn.

However, development costs — incurred mainly in rolling out the Domino’s Pizza franchise — saw the bottom line deep in the red.

There was, however, some encouraging news at struggling fast food franchise, The Fish & Chip Co, where trading showed a marked improvement in the second half.

Gonzaga said The Fish & Chip Co revenue was down only 12% after three consecutive trading halves that showed a 20% decline.

"Same store sales in March, April, and May are actually showing growth, and some of our revamped stores have shown growth in excess of 25%," he said.