Starbucks model improving with every outlet, says CEO

Taste Holdings CEO Carlo Gonzaga.

Picture: Martin Rhodes

Starbucks is a US company founded in Seattle in 1971. Taste is the first South African company to bring the brand officially to the African continent.

The first store opened in Rosebank, Johannesburg, in April, followed by a second store in the newly built Mall of Africa in Midrand soon after. At the end of September, a Starbucks outlet will launch at Menlyn Maine Central Square in Pretoria. The square, said to have cost R1.8bn to develop, is located near Menlyn Park Shopping Centre.

Gonzaga spoke about attracting international brands to SA at the South African Council of Shopping Centres conference held on Friday in Sandton. While he was pleased at how his team had improved the stores’ operations, he admitted that the other brand Taste had brought into SA, Domino’s Pizza, had so far disappointed.

"It took nearly three years to bring Starbucks. We conducted all kinds of studies and we had to convince Starbucks that SA would be a market where consumers would accommodate their brand. There were incredible queues when the stores eventually opened and we have spent the last few months improving the service and speed of service at those stores," Gonzaga said.

In the past four months, service at the Rosebank and Mall of Africa Starbucks outlets has increased 60%, according to Gonzaga. "It has turned out that having a third Starbucks store in our head office has been an important tool for improving the service at the two stores. We can train staff at our headoffice stall and test strategies there," said Gonzaga. He said Starbucks would gradually roll out more stores in SA, but Taste would be careful not to roll out stores too quickly. Gonzaga did not want to repeat any problems that had occurred with the introduction of the Domino’s Pizza brand.

"We probably got Domino’s wrong. We are working on meeting the challenges which we have faced with respect to launching the brand," he said.

Development costs in rolling out the Domino’s Pizza franchise had been higher than expected.

Gonzaga has predicted that Taste would break even on Starbucks after five stores were up and running.