Troubled drinks chain Coffee Republic is scrapping the ‘Friends’ look, removing its sofas and changing its store design to a New York deli format. The tactic is highly appropriate given the current barrage of undifferentiated coffee shops, coupled with inner city lifestyles that are growing ever more conducive to fast casual food and drink venues.
The Coffee Republic chain, which has just reported pre-tax losses of £9.8m, is turning its back on the fad for sofas associated with the Central Park coffee bar featured in the hit US sitcom, Friends.
In what can be considered relatively drastic action, the group also plans to halve its number of branches whilst simultaneously moving to the New York deli format, which will eventually signify a change in brand identity to “Republic Deli”. The company has already closed its least profitable branches, reducing its estate of coffee bars from 107 to just 72, with a final figure set at 50.
The new style bar formats are being refurbished as delis and the sofas are being replaced with a set design that meets with consumers’ growing need for a quick eating, drinking and meeting venue.
The move is part of an overarching strategy to increase profitability. The current sofa format was deemed restrictive because it does not encourage customers to spend enough money. Internal research and observation showed that guests could be sitting in the stores for an hour nursing only one cup of coffee.
Furthermore, the coffee group has seen its profitability hit by intensive competition from a rash of rival chains such as Starbucks [SBUX] and Aroma, especially in central London. Trials of the new look have been implemented at two branches in London, offering fresh sandwiches and hot food counters as well as coffee. They proved to be 20% more profitable than the traditional format.
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By GlobalData
The hectic pace of inner city London life, where the group has a particularly strong presence, seems highly conducive to its new service concept. Furthermore, the similarity between the enormous numbers of inner city coffee shops has created an opportunity for a leading player to take steps to differentiate itself from the competition. In what seems like a move of necessity, Coffee Republic is leading the way.
