Starbucks Corp is preparing for a new partner in its New Zealand market after the current license holder announced it would not be renewing its deal of two decades across the region where a coffee culture that is very entrenched has made things tough for the largest coffeehouse chain in the world to thrive.
Restaurant Brands New Zealand, the fast-food group, announced on Monday that it would allow its licensing deal to expire this October, although Starbucks would remain open and its coffee flowing with Tahua Capital, its new licensee, which acquired the license at the cost of as much as $2.9 million.
Through a prepared statement, Restaurant Brands expressed that the coffeehouse chain was beginning to be less relevant to the overall directors of the company, and its intentions were to focus on the core business is has which is fast-service brands like Pizza Hut and KFC.
One analyst in Auckland said that Starbucks did not deliver what was expected in New Zealand. One other analyst said Restaurant Brands had high aspirations for Starbucks several years ago when it first acquired the licensing but they were never achieved due to competition for either local chains or standalone coffee shops.
A vibrant coffee culture exists in New Zealand that has made for intense competition for the big chains like Starbucks that first opened its doors in 1998 in the country.
Small coffee shops with drip coffee and espresso are plentiful, while Fuel Coffee and Mojo coffee are amongst the national roasting chains that can be found in many places, and are expanding into China.
Similar resistance was encountered by Starbucks in nearby Australia as gourmet cafes thrived in big cities such as Melbourne and Sydney dating back to postwar immigration from Italy that introduced espresso in the 1950s to the island nation.
Ten years ago, the coffeehouse chain reduced its overall presence dramatically in Australia, as it closed 61 of 85 locations. It currently has 34 stores located in Melbourne, Brisbane, Sydney and the Gold Coast.
Tahua Capital was established to buy the Starbucks New Zealand assets and would seek to secure new leases for 22 Restaurant Brands Starbucks stores, and would keep all 330 of the Starbucks employees currently on the payroll.
The deal will close during October, said Restaurant Brands through a prepared statement.