How Coffee Shops Have Adapted to the New Normal: Building Resilience in Uncertain Times
The coffee shop sector took a major hit during the Covid-19 pandemic, with a report earlier this year suggesting that nearly £2billion had been wiped off the market value – down 39% from the previous year. For the first time in over 20 years, the UK branded segment posted negative sales and outlet growth. Recovery is predicted to take 3 years, with the market projected to recover to pre-covid-19 levels by 2024.
But could this provide an opportunity for smaller, more independent brands to flourish and increase their market share? One thing that is certainly agreed is that recovery will require significant innovation, discipline, leadership and the ability to quickly adapt to changing market conditions. And that ability to quickly adapt is something that Junaid Makda, Managing Director at Bru Coffee & Gelato, says that smaller outlets should be well positioned to excel at:
“It’s a challenging but really exciting time for the coffee shop sector – especially for smaller chains and independent stores who do not have big corporate machines behind them so are arguably more nimble, able to experiment and make changes more rapidly.
“It is often assumed that the bigger coffee houses have the experience and resources to enable them to innovate and lead the way more easily but this doesn’t need to be the case and I think the potential of smaller outlets is often underestimated – both externally and internally within the organisation.”
Bru Coffee and Gelato were established in Leicester in 2014 and are a company with national ambitions. They bucked the trend during the pandemic, excelling in uncertain times. Bru continued to expand and invest in their business despite the huge levels of unpredictability that the pandemic presented. They have proved themselves a market disrupter that is revolutionising coffee shop culture. In the height of the covid-19 crisis, they increased their business by 50% opening new outlets at Canada Water, London in August 2020 and in Reading in December. They now have six stores across the UK and have bold ambitions to rapidly increase their franchises over the next few years.
Junaid says that opening two new stores during this time was risky. But he is adamant that being bold and making difficult, and sometimes scary, decisions is what has put them ahead of the competition:
“People asked me – are you mad? And I responded, well yes, I suppose we are! But we had big ambitions for the expansion of Bru and we decided early on to remain committed to driving forward with our plans. In addition to opening the two new stores, we completely refurbished two of our stores (Leicester and Walthamstow) and we also bought forward maintenance work at our other stores to utilise the downtime – turning the challenge into an opportunity.
“In addition, we invested in our head office team to better support our stores through the challenging times. We also invested heavily into product development, technology and packaging tailored towards the changing consumer habits and trends. This allowed us to adapt our stores to offer a delivery and take away service rather than just eating or drinking in. This service remains a strong income stream for the business.”
Just over one month on from 19th July, or ‘Freedom Day’ as it may be better known, Bru is reaping the rewards of the determination that they have shown over the last 18 months and their ability to adapt the way that they work since being plunged into the Covid world.
“The decisions and the investment that we made just go to prove that sometimes in business you have to take the risks to reap the rewards.
“If you look back seven years to when we opened our Leicester store, the area was full of closed, or closing shops. It is now a popular destination for cafes and restaurants and has a real European street café culture. We like to think that we have contributed to this. But if we hadn’t looked past the negatives and driven forward with our venture then we wouldn’t be where we are today. We now want to replicate this success across the UK and we didn’t want the pandemic to stop us from moving forward and expanding our business.
So what does the future hold for Bru and other independent and smaller scale coffee chains?
Junaid says that he is feeling positive and urges others to see the opportunities and think positively also:
“This has the potential to be such an exciting time for the independent coffee shop sector. Whilst there is still a level of caution, as there should be, we’ve found that customers have been keen to return to some level of normality. We’ve also noticed an increase in customers visiting as groups or families from across multiple households. People are enjoying their new found freedom and are choosing to socialise in larger numbers.
“As well as noticing some changes since 19th July, it is important to note that a lot has stayed the same because we have found that it is working well for us. We’ve kept the screens and sanitisers for now but will continue to review their use based on feedback from customers, staff and advice from government. I think sanitiser will be here to stay – it has become such a normal way of life, it’s easy to do and doesn’t really have any impact on people’s social experiences. Some of the innovations that we have made during covid will also continue to give us a competitive edge moving forward.
“The experiential differentiation and uniqueness that smaller, independent coffee shops can provide is also something that customers are loving. After eighteen months of restrictions and limits on where they can go, customers want to experience new and interesting environments. The experience and surroundings are often just as important as the product and this is where independents could have the edge. It’s not just us that see the potential for the sector moving forward – enquiries for franchise opportunities are also at an all-time high.
Junaid also credits his team as a key asset who have really come together to support the business and contribute to its success:
“Our team has been incredible and they have returned more resilient, more motivated, with increased morale and excitement to be back to some form of normality.
“There have been differences across the different outlets – our store in Cardiff in particular has specific challenges to face as the regulations are different in Wales but they are responding well. Time will tell what the future holds but I think that the past eighteen months has been a defining time for the business. The innovations and investment that we have made has made us stronger and we have an increased level of confidence and positivity. If we can come through this, we can get through anything the future may throw at us.”