Starbucks has put an end to speculation it could sell its British business with plans to invest £30m here and open 100 new coffee shops. The US hospitality giant, which has 1,066 outposts across the UK, said it would spend millions refurbishing its existing branches over the next three years
The story of how two electrical specialists teamed up and succeeded in the Middle East following the global oil price crash ~ During times of economic uncertainty, it is often prudent for business leaders to diversify their companies’ products, services and markets to mitigate their risk exposure. In the
Starbucks has put an end to speculation it could sell its British business with plans to invest £30m here and open 100 new coffee shops. The US hospitality giant, which has 1,066 outposts across the UK, said it would spend millions refurbishing its existing branches over the next three years and opening new branches over the next year, following reports last summer that it was considering selling the business. The company mulled a sale amid rising competition from rivals such as Pret A Manger and high inflationary pressures. The company said at the time it was “not in a formal sale process”. The investment plans signal that Starbucks is committed to Britain for now. Accounts filed with Companies House show Starbucks’s UK sales rose by 37pc to £449m last year, surpassing pre-pandemic revenues for the first time. However, pre-tax profits dropped by a fifth to £10.4m as the climbing cost of everything from coffee beans to cups and energy ate into margins. Starbucks also gave its baristas a pay rise last year, reflecting intense competition in the labour market and a cost of living squeeze on workers. As costs soared last year, Stabucks raised the price of some espresso drinks and iced beverages by approximately 4pc. Duncan Moir, president of Starbucks Europe, Middle East & Africa (EMEA), said: “Whilst we are cautious about the macro-economic environment, we will continue to invest to grow the region this year. We plan to open over 100 new stores in the UK and 300 new stores in EMEA, to continue this growth momentum.” New stores will be a mixture of company-owned branches and franchised stores. Starbucks owns about 30pc of its outlets directly in the UK, with the remaining 70pc run by franchisees. Mr Moir said the coffee chain wanted to open “digitally-forward smaller stores” and more drive-throughs. The business recently announced a new range of drinks in Italy called Oleato, which are coffee beverages with extra virgin olive oil. The unusual drinks are expected to launch in the UK over coming months. Building, Design & Construction Magazine | The Choice of Industry Professionals
The story of how two electrical specialists teamed up and succeeded in the Middle East following the global oil price crash ~ During times of economic uncertainty, it is often prudent for business leaders to diversify their companies’ products, services and markets to mitigate their risk exposure. In the same way that many businesses are now adjusting their strategic outlook in light of Brexit, others are using the opportunity to enter into new markets. Following a similar period of uncertainty in 2015, after the global oil and gas price crashed, load bank specialist Crestchic and power distribution specialist ide Systems teamed up to take on the Middle East power rental market. It may come as a surprise to learn that some of the world’s biggest companies started out life in a very different form to the brands we know and love today. For example, Twitter started life as a podcasting service, Starbucks used to sell coffee machines, Nokia began as a paper mill, Hewlett-Packard specialised in electrical testing products and even Apple teetered on the brink of bankruptcy before Steve Jobs launched the iPod. A difficult dilemma Similarly, Crestchic found itself in need of an adjustment to its business model when the global price of oil and gas crashed. One of a group of companies owned by AIM-listed Northbridge Industrial Services plc, Crestchic is the world’s largest specialist load bank manufacturer, having sold and hired equipment to companies worldwide for over 25 years. “Following the oil price crash, our parent company Northbridge plc faced a growing risk-exposure to a portion of its investment portfolio, which consists of businesses serving the oil and gas market,” explained Chris Caldwell, European rental director of Crestchic. “To mitigate this risk, we adjusted Crestchic’s strategic focus to capitalise on the growing power market.” The rapid growth of social media, online services and cloud computing in recent years has given rise to an increasing dependence on temporary and emergency backup power supplies, which are used to power the new wave of data centres. This is particularly true in applications such as financial services, hospitals and commercial buildings. Here, the use of load banks to test mission-critical power supplies is equally as important as the power supplies themselves. With a product range designed and manufactured in the UK, Crestchic has established successful rental operations in countries including the UK, France, Germany, Singapore, China and the USA. Generator rental companies typically purchase Crestchic’s load banks, transformers and critical testing equipment to fill a shortfall in their supply inventory. A fresh perspective As part of its diversification strategy, Crestchic spotted an opportunity to gain increased market penetration in the Middle East where Northbridge plc already operated a Crestchic Middle East (CME) rental fulfilment warehouse, as well as Tasman, an oil and gas tools business, in Jebel Ali, UAE. In order to deliver a full portfolio of rental equipment, Crestchic turned to power-distribution specialist ide Systems. Based in Cannock, Staffordshire, with outlets in London and Glasgow, ide Systems specialises in the rental and bespoke engineering of products including distribution boards, changeover systems, inline protection, and cabling. They typically supply sectors such as events, construction, commerce, healthcare, and military. “Having already worked with Crestchic to supply rental equipment into France and Germany, we were keen to join forces to take on the Middle East rental market,” explained Ian Thomas, managing director of ide Systems. “We entered into a joint venture and used a revenue sharing model. We supplied the capital investment for the rental equipment while Crestchic supplied the facilities and the team required to manage the day-to-day rental operations. “Our research in the Middle East showed that it was ideally located to make a significant impact on the rental market and provide easy access to neighbouring regions including North Africa and India, as well as the wider Middle East and Asia.” Many GCC countries are still recovering from the 2009 global economic crisis, with average economic growth in the region forecast at 1.8 per cent according to the International Monetary Fund (IMF). Countering this trend, Dubai has certainly bounced back much faster thanks to its more diversified economy and is now set to experience 3.7 per cent economic growth in 2016. This is despite estimates by the IMF showing that low oil prices in the Arabian Gulf will result in the loss of $140 billion in export revenue. Part of the reason why Dubai has bucked the economic downturn is the government’s creation of economic hubs such as the Jebel Ali Free Zone (JAFZA). Boasting one of the Middle East’s busiest ports, the Jebel Ali Free Zone is a state-owned free economic zone designed to provide foreign businesses with a low-tax, low-bureaucracy, environment that delivers extensive infrastructure supported by excellent logistics. Overcoming obstacles Taking advantage of this opportunity, ide Systems provided a suite of electrical equipment ranging from power distribution boards, automatic changeover systems, switches, inline protection, cabling and more. “However, simply supplying the equipment was not enough,” continued Thomas. “We faced some key challenges unique to the Middle East. We had to make some minor modifications to the equipment to withstand the extreme temperatures, especially for outdoor use and at events. “Because the ambient temperatures can potentially cause internal components to fail, we adapted the equipment to include forced ventilation and added solar-gain shields to the housing to limit thermal issues. Many of the larger power distribution boards also needed to be adapted with caster wheels, trolleys and cradles for larger corporate events.” Compliance challenges As well as making technical modifications, the weaker regulatory framework in the region posed a challenge. To overcome this problem, the company ensured that all equipment was tested and certified to the highest levels, going beyond the regulatory requirements. “One of the weaknesses of the Middle East rental market is that many providers simply don’t test equipment properly,” explained Thomas. “This means that businesses who want to rent equipment cannot be entirely sure whether it was tested 12 hours ago or
