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Wake up and smell the coffee

Coffee chain Coffee Republic has today been forced to call in joint receivers after a review of the business proved ultimately unsuccessful in finding a way out of the current financial situation. The company had been looking to renegotiate a number of rental arrangements with regards to a number of outlets but this appears to have fallen on deaf ears.

The company is simply a victim of the recession which has seen discretionary spending tumble and visitor numbers fall sharply across the group. Operating in 10 different countries, from 187 different sites and directly employing over 150 people, the company is a mixture of franchises and directly owned outlets. Even though the company announced a loss of £527,000 for the first half of 2008 there were no debts at the time which may well come as surprise to many who read the news today.

However, competitor Starbucks recently announced a 50% reduction in its profits to $350 million, 10,000 job cuts and the closure of around 1,000 stores. While there is no doubt that the market for coffee will return in due course, when the recession ends and discretionary spending picks up again, it looks as though it has come too late for the likes of Coffee Republic which is another high street victim of the recession.

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