GEISHA KOWLESSAR-ALONZO
With a $5.8 million dollar investment in the heart of downtown Port-of-Spain, coffee company Starbucks is not only undeterred by the crime situation, but is confident that its newest location will increase its already growing customer base.
Publicly listed, Prestige Holdings Ltd holds the franchise for Starbucks in T&T and the local company's CEO Simon Hardy spoke to Business Guardian at Tuesday's opening, detailing what it took to to bring the store to fruition, future plans as well as on other issues.
Of the the $5.8 million investment, Hardy said "a large part,"about $3 million, was spent on local contractors and local supplies to retrofit the store.
On the lease rental of the space, Hardy said he could not share such details, saying that was confidential.
Sourcing foreign exchange to meet the growing needs of any entity can be a challenge and for Starbucks, Hardy said ther was no exception.
"It is a continuous challenge for us but that is part of our expansion plan. It is about diversifying outside of Trinidad and Tobago and being to operate in markets that have more free availability of foreign exchange to help to balance the books so to speak...but it is a challenge for all of us operating when we have to import goods and we have to find the foreign exchange," Hardy explained.
As crime remains worrying for many businesses, including those located in the capital Hardy however, said he is not fazed that this will impact operations.
"I'm concerned about crime overall in the country. I'm not particularly concerned about Port-of-Spain being a particular hot spot compared to the rest of the country. Obviously, we are aware of the situation in the country; we have our security presence. Obviously, we would look at our operating hours but I don't think that it is something, that is Independence Square and Port-of-Spain, which stands out from the rest of our stores," he said.
Located at the corner of Chacon and Independence Square, the spot once housed fast food joint McDonald's which previously had a restaurant there between May 6, 1997 and October 25, 2003. The McDonald's closed due to low sales.
Then in 2017, the Telecommunications Services of T&T (TSTT), which had taken over the location as a retail outlet, closed as it entered the next phase of its digital transformation.
However, Hardy maintains the area is lucrative.
"We have been coordinating with developers as well as our franchisor, Starbucks International, which has to approve all sites that we do. So we found this location which we felt is perfectly located. We are near to all the banks, there's the T&T Stock Exchange, Nicholas Towers and a lot of great businesses nearby," he explained.
With a space of 1,600 square feet and a seating capacity of 35 people at any given time, Hardy noted this is the first pedestrian store for Starbucks Trinidad.
"A lot of the customers we expect at Independence Square might be grab and go. They are on their way to the office early in the mornings or grabbing something for lunch and then going back to the office. This is a bit different from the cafes you would have seen at Movietowne or South Park where people would more sit down. This is an urban, predominantly pedestrian store..this is really serving the inner city customers versus those who are driving," Hardy added.
This is also the first Starbucks to be located downtown Port-of-Spain with several other coffee shops already within walking distance.
Hardy, however, is not worried by the competition.
In fact, he believes it's a good thing.
"I think you will need to ask our competitors how Starbucks coming here affects their profitability...I think competition is good for everyone. It drives us to continue to improve our offering to what we bring to customers and our competitors also end up having to elevate their operations such that the customer ultimately benefits," he said.
Further, Hardy noted that Starbucks operates in close proximity to its competitors, emphasising that the company offers "something unique" which draws a gathering.
As to what gives Starbucks the competitive advantage, he boasted this entailed a number of factors including "absolutely fantastic assets, bringing the best in world-class cafe designs to T&T."
In addition, he said all the Starbucks stores are being built according to greener certification as Starbucks international demands.
On the most profitable Starbucks store in T&T, Hardy said that information is not disclosed according to stores, Het noted that the bigger locations like South Park and Aranguez, which are also "drive-thrus" are among the most popular.
Using local goods can greatly help the economy and Starbucks has been assisting in this regard.
For instance, Hardy said some of the sandwiches are sourced from a local supplier.
"We also use some of the ingredients that are imported by local distributors who we buy from, but obviously a large part of what we serve is sourced directly from Starbucks International. Those are the rules by which we are bound but we try to support as much local business as possible," Hardy explained.
What's next for Starbucks?
Hardy said while new locations are kept close at hand so as to avoid tipping off competitors, he noted, however, that a second cafe was recently opened in Guyana.
"We are looking at a combination of both Guyana and Trinidad in terms of our store growth plans," Hardy added.
Regarding whether there are any other countries in the region which, were also marked as the company expands its footprint, he said this was "all subject to discussions."
Starbucks is part of Prestige Holdings Ltd.
Incorporated in 1972, Prestige Holdings Ltd (PHL) is a restaurant management company which operates the KFC, Pizza Hut, TGI Fridays, Subway and Starbucks brands in T&T as well as other Caribbean Islands.
According to the company's consolidated unaudited results for the three months ended February 29, 2024, PHL enjoyed a strong performance for its first quarter of fiscal 2024 as its profit after tax increased by 25 per cent from $7.8 million to $9.8 million.
The results noted that group sales increased by 10 per cent to $341 million from $309 million in the prior year, which resulted in a profit before tax of $15.3 million compared to a profit of $11.6 million for the same period in 2023.
That was a 32 per cent increase.
In commenting on the company's performance, Prestige chairman, Christian Mouttet, in his statement, further noted, "Cash flow from operations was $26.9 million and we ended the quarter with $100 million in cash having reduced total borrowings by $5.8 million. During the period we remodelled two restaurants and ended the period with 134 restaurants."