Tesco Coffee Shops

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TESCO COFFEE SHOPS?

2013 will mark a radical change in the coffee shop market with the arrival of ‘Tesco Coffee Shops’. Traditionally, one was faced with the choice between going to a chain offering low quality coffee or visiting an independent coffee shop serving superior coffee in a more personal environment. Not anymore. With the launch of a chain of new coffee shops, Tesco is looking to conquer the coffee industry and carve its own mark in Britain’s Coffee Revolution.

Rather than branding their chain ‘Tesco Coffee Shops’, the retail group has opted for the slightly more covert title of Harris and Hoole. The new coffee shops are part owned by the multi-national retailer (who have a reported 49% stake in the company) and run by the Tolleys, a group of Australian siblings, who set up the reputable coffee shop business Taylor St Baristas in 2006.

The Tolleys are very passionate and knowledgeable about coffee and have ensured that every Harris and Hoole coffee shop is individual and serves excellent coffee. As you walk into a Harris and Hoole, the minimalist interior mirrors the décor found in many of London’s independent coffee shops.

So if Harris and Hoole serve great coffee, have extremely friendly staff and provide a great environment to enjoy your coffee and cake, what’s the issue? Well, the issue, according to some, is that there is no sign in the stores that they have an affiliation to Tesco. As a result, many consumers feel cheated into believing that they are spending their money in a local, independent coffee shop (a welcome alternative to some of the bigger chains that have been recently criticised for avoiding tax).

Starbucks Coffee Shop

I empathise with those that feel duped but the fact stands that Harris and Hoole serve great coffee in a nice setting with very pleasant staff. As the reputation of the company grows, I think people will get over their negative reactions and start to care less about the fact it is part-owned by Tesco. People still go to Starbucks and Costa and they are massive chains in their own right. Even if Harris and Hoole is a chain, I would much rather there be chains that get people excited about great quality coffee than chains that ruin a lot of people’s perceptions of what coffee should taste like.

If you’re still not convinced, that’s more than ok, because there are still many fantastic independent coffee shops in London to please the more discerning coffee lover. I don’t see Harris and Hoole’s emergence on the market threatening independent coffee shop. Ultimately it is a chain and will always lack that unique and personal touch that independents offer.

Saying that, the launch of Harris and Hoole is definitely something to watch out for. The stores will enjoy all the economic benefits of a large chain while offering a lot of advantages that have been traditionally exclusive to independent shops. These new coffee shop hybrids have the financial might of Tesco, combined with the creativity, knowledge and experience of coffee experts and are therefore sure to have a huge impact on the coffee industry in 2013.

Tesco Coffee Shops
 

5 Responses

  1. Brian's Coffee Spot

    01/18/2013, 11:10 am

    An interesting article, Henry. I know that there has been a lot debate about the whole Harris + Hoole business and I don’t think it’s going to settle down any time soon. A lot has been made of the Tesco angle, but I am very much in two minds about this. We hear a lot about small UK businesses struggling to receive funding, particularly from the banks, so shouldn’t we be congratulating Tesco for stepping in and investing in a UK business?

    Of course, the situation is muddied by Tesco being a 49% owner. Yes, technically, that’s a minority stake, but are you really going to go against someone who owns almost half your business? So, should it want to, Tesco could exert a lot of control. But, looking at it another way, it’s still not Tesco Coffee Shops. The Tolley family have come up with a brand and have got Tesco to back it. Exactly how much of that is down to Tesco’s influence, who knows?

    However, looking beyond ownership for a moment, H+H is still a chain with, I’m sure, ambitions to become a much larger chain. Perhaps it will raise the overall standard of coffee in the UK. Time will tell.

    On the chain vs independent debate, when does a chain get so large as to stop being considered an independent? I’m a big fan of the Boston Tea Party chain in the south west, with shops now spreading out from Bristol as far as Exeter, Birmingham and Salisbury. At what point do I look at BTP and start thinking “chain” rather than “local independent” in my head and does it matter?

    On the one hand, it does matter. If I go to my favourite Coffee Spots in Guildford, Bar des Arts and Glutton & Glee, both are locally owned, locally operated businesses. I know where my money is going. Similarly, if I buy my beans from Coffee Charisma on North Street Market, I know where my money is going (in this case, I know exactly who it is going to).

    On the flip side, I was recently in Edinburgh and was surprised by how many independent coffee shops there were using beans from London. So, yes, supporting my local coffee shop means my money is going back into my local economy, but in this case, a chunk of it is going off to London. Again, does it matter?

    At the end of the day, the only person who can make that decision is you, the individual consumer. Does it matter to you? Do you want to know? If you do, find out and make your decisions accordingly. If you go into a branch of a chain that provides you with good service, a nice environment and coffee you like, which sources locally and which is providing local employment, paying rent and business rates, then maybe you don’t much care where the profit it going (and I’m not saying you should). All I am saying is that you should try to make informed choices.

    However, there is one thing that bothers me (personally) about H+H that seems to be overshadowed by the Tesco ownership issue. H+H is a British business. All its coffee shops are in the south-east of England and it gets its beans from a London roaster. So, why is its headquarters based in Dublin? The company says it’s because it is a good base for a company with ambitions for international expansion/franchising. The cynic in me says that H+H is already looking to go down the Starbucks/Caffe Nero route of not paying any UK corporation tax.

    Only time will tell since, given the cost of setting up (I think) 13 branches in six months, it’s gong to be some time before H+H does make a profit on its operations. But I’ll be keeping an eye out to see whether, in a couple of years, H+H starts paying its parent in Dublin consultancy fees and licencing fees for using the H+H brand which magically match its UK operating profit. Hopefully I am just a cynic, but we shall see.

    Brian.

    Reply
    • Henry

      01/24/2013, 10:52 am

      Hi Brian,

      Thanks for your comments. You have opened up quite a few debates there! Very interesting ones at that.

      I find your point questioning when does a chain stop being considered independent? Some of the best coffee shops in London like Department of Coffee and Social Affairs (part of Coffeesmiths Collective) and No.26 (T & P chain) are part of small chains but I think that they’r stil universally considered independents. However in those cases the names of the shops are all different and they have different characters about them (less so with T & P). I’m stil undecided on that issue.

      I absolutely agree with you on that people should try to make informed choices and I think that’s precisely why people got frustrated with H & H. They thought that they were making an informed choice (choosing to avoid a big chain and go to a local independent) but realised that they had imperfect information. However, with H + H being all over the news now, I think this will happen less and less now.

      The fact that they have their HQ in Dublin is strange…let’s hope the cynic in you is not proved right!

      Reply
  2. Andrew Missingham

    01/18/2013, 09:08 pm

    Hi Henry, first thanks for the kind words about my blog at http://amissingham.com/2013/01/10/crouch-end-coffee-economy/. It’s good to know I’m not alone in not being a “hater”.

    I’d really appreciate your (or any of your readers) best guess at how much an average coffee shop (say in London, 500 sq ft, no full kitchen) needs to turnover to break even. With H+H Crouch End bringing our total to 18, I’m damned if I can see how this feat of levitation works!

    Reply
    • Henry

      01/24/2013, 10:55 am

      Hi Andrew,

      My pleasure! I still haven’t managed to work out a good guess about your break even question but i’ll try to remember to ask a cafe owner if I get the chance over the coming weeks.

      Reply

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