EXCLUSIVE: Second Cup Reveal How they Plan to Become A Big Player in the UK Coffee Market
Having opened their first store in Manchester six months ago, and with their next store set to open on London’s Portabello Road in addition to a slew of other sites slated to be up and running by year end Canadian coffee chain Second Cup have big plans for the UK. QSR Media went to find out more from UK Franchise Director Jon Cullen.
QSR: Tell us a bit about Second Cup?
Second Cup was founded in Canada 40 years ago and has grown to be the largest specialist coffee retailer in the country. We have over 345 outlets across Canada selling over one million beverages a week in addition to another 200 or so stores globally.
QSR: The coffee market in the UK is a crowded one – why and where did you see opportunity in this space?
The coffee market in the UK is certainly a mature one, so we needed to look at our positioning to make sure that there was room for a new brand. However, against that backdrop, the coffee industry is expected to grow about 11% this year and by 2020 coffee sales in the UK will be worth about £21 bill, so the market is growing and there is plenty of scope for new players to work in.
So once we positioned where we wanted to be- a good food offering, a wide US/Canadian coffee and cake offering the UK market looked attractive.
Additionally, if you want to be involved in a franchised coffee business the current offering won’t allow you to do that so a new brand coming in gives people the opportunity to be in town centres. This isn’t necessarily the case with existing chains as they are already in those towns.
QSR: You talk about your brand proposition. What is that and what sets Second Cup apart from the competition?
Well we see ourselves as different in that our coffee and tea offering is broader than say a Caffe Nero while our food offering is more like that of a Pret a Manger. Our food range is large and wide ranging. It includes gateaux, pastries, paninis, as well as soups and stews, so we do a much bigger cake and food offering than our competitors. In addition, due to our Canadian roots, we do a lot of brewed coffee, offering light, medium and dark roasts and we also have a massive range of tea. Our beverage range is bigger than that of our competitors too. We also do frappes and frozen yoghurts.
QSR: Coffee pricing has become a battleground for some chains battling for the breakfast market. Where do you fit in terms of price point?
We don’t want to be the cheapest nor do we want to be most expensive. We want to compete in the chain coffee market, so our prices are competitive with those of Starbucks, Costa Coffee and Caffe Nero.
QSR: You’re about to open your first store in London, what other plans do you have for the city and beyond?
Our first London store is set to open on Portabello Road though we have plans for two further stores around the city. Although negotiations are still underway, I’d expect to see Second Cup’s around South Kensington and Oxford Circus. Our strategy for London is to be in high traffic areas.
In addition, we are well underway in setting up sites in Bristol and Birmingham, together with another site in Manchester.
With all these in train, I’d expect we’d be five to six stores strong by year end.
All the sites are being run by area developers and it is expected that each of those will open five stores over a five year period.
Currently we have 6 franchise area development partners.
QSR: How big can we expect Second Cup to get in the UK?
Certainly over the next 10 years, we expect to have 300-400 stores.
QSR: Brand recognition is going to be important as you expand. What are you doing to get your message out there?
Our approach to brand recognition is really about opening stores. We intend to be in the main cities in the UK. In addition our UK partners are used to the franchise model and know the importance of getting the second and third stores open quickly so we have the presence of a chain, versus a single, standalone outlet.
It’s also about the food offering, so wherever we open we need to make sure we get the offering right so customers want to come back to our other stores. To that extent we also vary our menu by location. So while our drinks offering is fairly standard across stores, the food offering will differ cafe to cafe. So for example our first site in Manchester has a large Middle Eastern population so we have a large halal menu. Portabello Road is a quirky, trendy area with a large tourist footfall so we’ll do a lot of pastries and gateaux for the mid-morning trade, and we’ll also offer a lot of salads and healthy options because it is also a health conscious market. The interiors will also be fitted out differently, in a more quirky, trendy manner.
QSR: What were the most and least challenging aspects of getting Second Cup up and running in the UK?
The most challenging and least challenging aspects for us were essentially two sides of the same coin. The coffee market is a very competitive and therefore challenging one, however in many ways that also made getting set up easy. The market is huge so for us, as a new brand, working with franchise partners meant that our brand makes sense for those looking for a bolt on to their existing portfolios. As proof of that, our Manchester store has been open for six months now, and in that time we’ve already signed up six area developers. A lot of people with fast food experience recognise that coffee is a good bet, and believe that Second Cup is a great brand to go with given our 40 year track record.
