Most of them seek to enter via a takeover to ensure them a strong position on highly fragmented market, whose leader, Starbucks, accounts for only 2% of the 4 billion lei (about EUR900 million) sales.
The café and bar market was one of the worst hit by the crisis in 2009, which caused some major local brands, such as Turabo, and international brands like Costa Coffee and Dunking Donuts to disappear. The latter two tried their luck in Romania but left the market after a few years.
Costa Coffee left Romania during the crisis and is now considering a return. The UK-held company, the second leading café owner in the world after Starbucks, seeks to enter via a takeover to avoid starting from scratch on a market where other rivals already have tens of coffee shops. The same goes for Esquires Coffee, another UK-held company also operating in Canada, Ireland, Middle East, Australia and Asia.
The two are looking at big chains on the local café market. The market leaders by sales are Starbucks, McCafe (part of McDonald’s), Gloria Jean’s, 5 to Go and The Coffee Shop.
The latter two are local businesses developed by Romanian entrepreneurs, so they might be interesting to a foreign chain. However, The Coffee Shop is rather small, with only six cafés, selling specialty coffees, which is not the business model of international chains.
On the other hand, 5 to Go, built by entrepreneurs Radu Savopol and Lucian Badila and developed as a franchise, has reached 55 coffee shops. Moreover, the chain has recently announced plans to expand west, in Timisoara, where three coffee shops are due to open.
Radu Savopol says interest from foreign investors is there but he is not in talks over a sale. His chain’s business model is different, a cup of coffee there costs 5 lei (EUR1.1), two or three times less than at Costa Coffee or Starbucks. 5 to Go cafés are also much smaller.
However, on some markets in the region the takeover by a foreign chain did not change the brand or business model, merely adjusted it by adding something along the lines of ‘by Costa Coffee’.
Another scenario could be the takeover of just the cafés of an international chain operated as a franchise in Romania and the exit of that particular brand.
Competition could become even fiercer as coffee distributors like Moak, illy and stretto seek to expand on the café market via a takeover or a partnership. Private equity firms, too, are looking for opportunities to buy something on markets connected directly to consumer spending and the café market is one such example. The market leader is not up for sale and is held by Poland’s Amrest.
(English version by Loredana Fratila-Cristescu)