Coffee Club closures, where to next for Qld franchises

They were the cafe scene trendsetters in Queensland but Coffee Club now has some stiff competition and a number of stores have closed in the past couple of years. Experts say the owners of the brand may have to rethink their strategy or risk losing more.

THEY were Queensland’s coffee pioneers with the recognisable slogan, “Where Will I Meet You?” but it’s becoming a case of where will I find a Coffee Club to meet.

In the past 14 months, almost half a dozen southeast Queensland Coffee Clubs have shut their doors, including Wilston Village, Sherwood, Nundah and Broadbeach (after 21 years).

Previous to that, Paddington, Albany Creek and Hamilton Harbour came to a grinding halt (pun intended) while Caloundra Stockland shut for a week before reopening after the previous franchisee called it a day.

The Coffee Club at Wilston Village closed its doors in August last year and was replaced with a Fritzenburger restaurant. Picture: Darren Cartwright

QUT Business School professor Gary Mortimer said the Coffee Club brand, owned by Minor DKL Food Group, needed to regroup and consider a number of key points including revisiting its slogan.

“They need to revise their menus, make them smaller and therefore more cost efficient and I also think they need to identify what their point of difference is,” Mr Mortimer said.

“How do they differ from Zarraffa’s, Gloria Jeans or Merlo Coffee? And they had a very clear social position around ‘meeting you’ at the Coffee Club but that’s what everybody does at a cafe’.

The former Coffee Club premises at Paddington has been vacant for more than two years. Picture: Darren Cartwright

The Coffee Club started in 1989 after Emmanuel Kokoris and Emmanuel Drivas went cruising for a coffee late at night in Brisbane and came up empty-handed.

That spurred them to open the first cafe and now, according to its website, there are approximately 400 stores spread across nine countries and 40 million dedicated customers.

Mr Mortimer said the Coffee Club may have got its foothold in the nineties but had not moved with the times.

The former Coffee Club premises at Sherwood was vacated in September. Picture: Darren Cartwright

He said the coffee scene changed massively off the back of local coffee legends Dean Merlo and Phil Di Bella in the early 2000s and consumers have become more sophisticated and demanding.

“You have Dean Merlo and Phil de Bella who really kicked off coffee in Brisbane and drove that popularity and between 2000 and 2005 the market started to shift,” Mr Mortimer said.

“The Coffee Club haven’t responded fast enough to changes in the marketplace, to direct and indirect competitors, and downsizing the fleet to a smaller model.”

Yet another vacant Coffee Club premises. This time at Hamilton Harbour, adjacent to Portside Wharf. Picture: Darren Cartwright

The Coffee Club at Nundah Village closed its doors in May while the Paddington venue on Given Terrace has been abandoned for more than two years.

Both prime locations with large premises remain vacant.

Mr Mortimer said renting large stores placed a major financial impost on a franchisee in a market where cannibalisation was almost a sport.

“The stock standard cafe is being impacted by emerging competitors and cafes are shrinking their model because a lot of people will grab ‘n’ go with their coffee,” Mr Mortimer said.

“Since Coffee Clubs entry into the market place we have seen a number of cafes open up and new competition like Starbucks which has remerged as a power in Queensland and Cafe 63.

“Even service stations are moving into a better coffee or cafe experience because consumers are looking for a better quality experience and a shift away from mainstream coffee franchises to a hole-in-the-wall type of cafe and they are comfortable sitting on stools under an umbrella.”

The Coffee Club premises at Nundah Village has been vacant since about May. Picture: Darren Cartwright

The Nundah Village site was not without its problems.

A former Coffee Club franchisee at Nundah Village and his company, were fined more than $180,000 for the exploitation of an Indian national who was on a working visa.

He had been underpaid minimum hourly rates, casual loading, annual leave entitlements, overtime rates, payment in lieu of notice of termination and weekend and public holiday penalty rates.

Mr Mortimer said wages and rent were big outlays for an operator but at least an independent owner did not have the added financial burden of franchise and marketing fees while retaining the freedom to alter their menu.

“An independent cafe will have the same costs without the franchise fees and they do not have to secure inventory through the franchisor which can be anything from pre-made sandwiches and cakes.”

Minor DKL Food Group were contacted for comment.

Interior of Paddington Coffee Club which closed more than two years ago appears as though it could re-open tomorrow. Picture: Darren Cartwright