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Shopping Centers Today -> September 2001
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CAFE SOCIETY
A European tradition moves beyond the local cafe as coffeehouse chains expand their reach
By Susan Thorne
Sipping a latte or a cup of dark espresso at the local cafe is so popular in North America that people often forget that this coffeehouse habit was imported from Europe. Now that process is coming full circle as the leading coffee retailer in the United States prepares to roll out its stylish concept across Continental Europe.
In March, Starbucks opened its first European store in Zürich, Switzerland, in partnership with the Bon Appétit Group, a Swiss partner, and announced plans to enter six other as yet unidentified European countries in the next two years.
This follows the successful invasion of England, where the Seattle-based company now has 194 outlets. But Starbucks isn’t alone in pursuing the business of Europe’s coffee customers, and with a cafe tradition well established in many regions, the competition will be stronger than in other world markets.
What’s more, European companies are also waking up, smelling the coffee and going after their home markets more aggressively.
In addition to small, local operators, Western Europe has a number of national and international coffeehouse chains. Several purveyors of coffee equipment and packaged coffee have their own coffee bars, though in some cases these are little more than a few stand-up tables in their tea and coffee stores.
Italy’s Segafreddo and Lavazza, Nestle’s Nespresso and Germany’s Tchibo (which has over 1,000 locations including the former Eduscho chain) are leaders internationally in dedicated cafes.
Food-service companies are also active. Mövenpick Gastronomy International, the Zürich-based food manufacturer and restaurateur, recently finished pilot testing its first Mövenpick Coffee Place in Vienna and will open 25 to 45 others in the German-speaking countries.
The U.K.-based arm of fast-food giant McDonald’s Corp., which bought British coffee chain Aroma in 1999, and Whitbread PLC, a pub operator that owns Costa Coffee, have exported their coffeehouse concepts to the Continent on a small scale; the Compass Group, Charlotte, N.C., is also putting forward Cafe Ritazza. Other players include bakery chains such as La Brioche Dorée in France and Germany’s Kamps, which will expand under its Bakerstreet and Kamps banners to 1,000 outlets in northern Europe and 150 in Italy in the next two years.
In Spain and Portugal there’s Caffe di Roma (acquired by Lavazza in 1999) and Jamaica Coffee Shop; while Coffea or Malongo shops are found in French shopping centers and main streets.
The Italian Autogrill restaurant chain, which has locations along many of Italy’s superhighways, is testing a new smaller (100-square-meter) concept for malls and downtown venues called ACafé, with table seating and quick service — both innovative for Italy, where many coffee shops are stand-up only, said Corrado Vismara, general director of Larry Smith retail consultants in Milan.
Rumor has it that Autogrill is putting forward this new venture because it hopes to become Starbucks’ partner in Italy.
Germany’s large customer market of 80 million may be one of the easiest targets for foreign takeover. Peter Fuhrmann, a shopping center retail consultant in Düsseldorf, said there is no serious competition at present. The Konditorei, the cozy old-style coffeehouse of Austria and Germany, is disappearing and other formats have mediocre coffee and food and unwelcoming ambience, he said. There is a lack of good choices for shopping centers seeking a coffee shop tenant, and Fuhrmann said of Starbucks, “We’d love to have them, and they’d be very, very successful. Germany is absolutely theirs for the taking.”
The speed and large scale of Starbucks’ planned rollout should provide an advantage in grabbing market share. Starbucks expects to have 650 stores in Europe by the end of 2003, according to a statement released by the company. Starbucks executives were unavailable for comment.
Compare this with some of the newer European players in Germany: Italy’s Pochino and Testa Rossa have fewer than eight units each, according to Fuhrmann, and World Coffee, the leading German contender, envisions only 45 shops in total. “These guys have no capital, and they expand very slowly,” Fuhrmann pointed out. On the other hand, anyone seeking to catapult themselves into Europe’s towns and cities will face much greater competition for prime locations than in North America, and high costs for such sites.
Janine Bosshardt, director of marketing and communications for Mövenpick, commented that alcohol sales (which Coffee Place will offer) are important in sustaining a profitable cafe in a premier location.
How readily will Europeans welcome American brands? Charles Joye of RDS Retail & Development Services in Geneva, Switzerland, and former chairman of the ICSC Advisory Board in Europe, said he feels that coffee drinkers will be reluctant to switch from the traditional coffee shop, often owner-operated, place they now frequent.
“Starbucks’ arrival will not be as big a sensation as McDonald’s, because coffee is offered in many other places, while we [Europeans] didn’t know hamburgers before,” he pointed out. “They will just be one among many players.”
Europeans have some ingrained habits based on their own distinctive food concepts and venues, too. In Italy, the lack of fast-food chains means that cafes have high traffic volume during the day for light lunches and takeout panini (sandwiches on a roll). France’s cafes and brasseries are frequented for alcoholic drinks during the cocktail hour as well as the coffee break. Ice cream and a large selection of pastries are offered at many Swiss and German cafes. There are also significant local variations in taste. In Italy, Vismara pointed out, “You have very different kinds of coffee from one town or region to another, so it is difficult to propose a standard solution. While cities and large towns may respond to a North American formula, particularly in northern Italy, a small town in the South might reject it.”
However Vismara, like Joye and Fuhrmann, expects the young generation under 45 to respond strongly to U.S. brands such as Starbucks.
Some emerging European coffee retailers also seem to value American style, because they resemble their U.S. cousins in decor, ambience and menus, not to mention their English-language names. World Coffee, for example, offers specialties such as bagels and flavored coffees from caramel to mint, three different cup sizes and the possibility of takeout, none of which are traditional Continental cafe features.
Mövenpick’s Coffee Place has a clean, modern, natural-wood decor reminiscent of Starbucks, though the cups used in-house are china, not styrofoam.
One U.S. branded concept that has prospered in Europe’s coffee sector is Dunkin’ Donuts, which offers its familiar favorites such as 52 varieties of donuts and the “Dunkin’ Original” American-style coffee in Germany, Greece, Italy, Poland, Spain, Bulgaria and the Czech Republic. Laurie Genovese, marketing director (International Division) for Dunkin’ Donuts, Randolph, Mass., said her company has adjusted its concept for the European market with espresso-based coffee drinks on the menu. “People frequent our stores for the wide variety of consistent-quality products,” she said. “They know us for our donuts, and they’re trying the coffee.”
There is great potential for U.S. food-service concepts in Europe, Genovese said, because of changing consumption patterns and the increased disposable income enjoyed by teens, young adults and families.
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