Scottish coffee-shop chain Beanscene went into administration this week and global leader Starbucks is closing stores across the world. Is this a storm in a demitasse or are we falling out of love with our luxury caffeine fix, asks Alice Wyllie
‘COME ON. Let’s get some coffee,” Monica says to Chandler in the 1995 Friends episode ‘The One With The Birth’. “Oh, OK,” he responds, “because we never do that.” The joke is a reference to the fact that for the ten years the hit TV show ran, that’s pretty much all the six impossibly good-looking stars of the hit US sitcom ever seemed to do.
From 1994 to 2004, we watched as they laughed, cried and quipped on the same sofa in the same coffee house in New York, drinking coffee out of “stupid big cups which, I’m sorry, might as well have nipples on them,” according to one bemused outsider. And we followed suit.
Eighty per cent of adults in the UK now drink coffee every week, and while in 1997 there were just 778 branded coffee outlets in the UK, by 2005 that number had jumped to 2,428. Twenty two per cent of Scots name coffee as their most frequently consumed beverage and of the consumers who visit coffee houses regularly, most cite social reasons for their visit.
“We’ve gone from a nation of tea-drinkers to a nation of coffee-drinkers in a decade,” says Professor Leigh Sparks of the Institute of Retail Studies at Stirling University. “There’s now at least one coffee chain on most high streets and we’re spending a lot of money on coffee.
“The growth in popularity of coffee shops has been a response to a strong demand and it’s as much about the environment as the coffee. People are always looking for somewhere to sit down and relax, put down their shopping bags and watch the world go by. The coffee almost comes second to that desire and the whole concept is very carefully marketed to offer warmth and friendliness, a place to relax above all else.” However, it seems we may be falling out of love with our daily caffeine hit. The Scottish coffee shop chain Beanscene has gone into administration because of a cashflow crisis, it was revealed yesterday, and has appointed administrators KPMG Restructuring. Officials at KPMG said the chain – which incorporates 14 shops in Glasgow, Ayr, Edinburgh St Andrews, Stirling and Hawick, and employs 142 staff – had struggled to cope with high overheads.
A statement issued by Beanscene says: “Despite a turnover of 4 million, the business had built an overhead base that was not sustainable by its 14 units. Add to this the costs of five leases that had been entered into for premises that were not fitted out or trading and the results were bottom line losses, which have continued into the current year. As part of a restructuring plan, ownership transferred in April 2008 to new backers and a significant injection of funds was made. With an unexpected change in circumstances, the new backers were unable to make further planned cash injections, resulting in the directors having no option but to place the company in administration.”
And Starbucks, the world’s biggest coffee chain, may also be taking a hit. This week it emerged that the company will close 61 of its underperforming shops in Australia – more than two thirds of its 85 locations in the country – by 3 August. The news comes less than a month after the chain’s US office announced the closure of 8 per cent of its 700 American shops, citing both the slowing economy – which they said has had a “major impact” on their profits – and their policy of over-aggressive expansion.
“Good coffee is now a luxury must-have for many, but with fears of a recession, consumers cut down on the ‘easy’ stuff, which often includes relatively expensive indulgences,” says Reinier Evers, the founder of Trendwatching.com. “Not all indulgences are ditched, especially not the ones that are infrequent – which consumers may actually value and want more, as they offer solace – but in the case of Starbucks and other coffee chains, these indulgences have become frequent and thus are first on the list to become less frequent.”
For anyone planning to look after the pennies and let the pounds take care of themselves, giving up that daily grande mocha with extra foam is a good place to start. Most of us have probably added up the money we’d save if we ditched our daily coffee/cigarettes/chocolate bar and perhaps reasoned that the money is worth the little treat, but look at it another way. By ditching the daily cappuccino, the average thirtysomething could add a whopping 3,843 a year to their retirement pot. If you spend 1.80 on coffee every weekday, it’s costing you 468 each year. Painful but do-able, you say? Read on. When compound interest of 7 per cent is taken into account, this amounts to 8,648 over ten years or 59,127 over 30 years. If, at 35, you were to put away all the money you spend on coffee into your pension pot, at 65 you could receive 3,843 more in your pension every year for the rest of your life. While we’re all in the depths of a credit crunch, it’s a sobering set of figures.
However, it appears we may already be taking other steps to curb casual expenditure on food and drink.
This week, Sainsbury’s announced that sales of plastic lunchboxes have shot up by more than a third and sandwich bags by a quarter. Might vacuum flasks be next as we choose to lug our coffee supply into the office with us, foregoing the daily trips to Starbucks?
Not according to Zoe Wheeldon of the British Coffee Association. “Coffee shops are one of the few retail sectors that have had a consistent year-on-year growth of more than 10 per cent for the past few years, and we expect that growth to continue,” she says.
“Going out for a coffee is still viewed as quite cosmopolitan and while it may be a luxury, it remains an affordable luxury and for a lot of people that’s now so much a part of their day-to-day existence that they’d be very reluctant to give it up.”
No need to panic then, caffeine addicts. It looks like we may be hanging around coffee houses sipping on up to 400 calories worth of sugar and caffeine (whipped cream and grated chocolate optional), musing over the intricate details of our love lives and exchanging witty banter for a little while yet.
After all, as we know, coffee is a powerful addiction and one that, even in the face of an economic crisis, many of us might be reluctant to let go. The local coffee shop offers us so much more than a quick caffeine hit.
It’s a sanctuary, a retreat, a place to meet friends, read a book or watch the world go by.
A tall caffe latte? 1.85. An extra shot of vanilla syrup? 50p. An hour away from the shops/office/children in a cosy armchair? Priceless.