CAIRO: Until a few years ago, it was easy to count all Cairo s coffeehouses on one hand. That’s not the case anymore, with tens of coffeehouse chains and hundreds of outlets opening up all over town.
Competition in the coffeehouse market intensified when several international chains – namely Starbucks, Coffee Bean and Second Cup – arrived on the scene.
Cilantro, the largest Egyptian coffeehouse chain with 34 outlets all over the country, said they do not fear the competition of their international counterparts. “There is no reason for us to worry about Starbucks, for instance, because the two of us are based on completely different concepts, said Cilantro’s Marketing Manager Abeer Abu Laban.
“While we put a lot of emphasis on the ambience and the whole customer experience, Starbucks offers coffee to go, she said, “They are more American, we are more French.
“We’ve been in this market for years and we know what customers are looking for in a coffeehouse, she added, “Egyptians like to be spoiled, they would prefer to go to a coffeehouse where they can be served well than to one where they just grab a coffee and sit on a table that they have to clean themselves.
Ahmed Gaafar, one of the owners of L’Aroma, a smaller, yet successful local coffeehouse chain with 10 outlets, said that the market is big enough for everyone. “Columbus and Coffee Bean are doing well, and we still have a waiting list every evening.
At the same time, Gaafar said that there will always be a temporary decline in sales with the opening of any new branch in the same neighborhood.
“An international chain opened up an outlet next to our Mohandiseen branch, he said, “our sales went down notably for two to three weeks and then came back to the same level.
“People go and try these new products and then they come back to us, he added. When asked why they come back, customers usually cite the difference in the quality of coffee.
Putting their confidence in their products aside, both Cilantro and L’Aroma admitted that the introduction of new chains to the market has had repercussions on their businesses.
With the existing chains expanding and more international names foraying into the market, there has been fierce competition over prime real estate, causing rental rates to escalate.
“We have two categories of outlets, namely community outlets, like the ones inside schools and clubs, and street stores, said Gaafar, “I don’t think the new players will have a negative impact on the first one, but they definitely [have an effect] on the street stores. The real estate prices have gone up like never before.
Abu Laban explains, “Although Cairo is such a huge city, the number of premium locations that guarantee a lot of visibility are quite limited. Because of the increasing demand, monthly rent for coffeehouse outlets has risen as high as LE 60,000. How much [profit] do you have to make per month to pay that off?
“Besides the soaring prices, there is the khawaga (foreigner) complex, Ahmed Gaafar said, “Many of the big malls that opened up recently told us bluntly that they would prefer to give their new available spaces to the international [chains] more than the local coffeehouse brands, because they are better anchors.
“This is not fair by any means, he added, “I was personally approaching Rachid Mohamed Rachid, because this is not right; not only from a business perspective, but also politically.
As a reaction to the rising rental rates, Cilantro is adopting a new expansion strategy with a focus on workplaces, schools and clubs. They won the bid for the new AUC campus, and they are opening up at the headquarters of Ericsson, Sodic, and other companies.
“Opening up in these locations is a convenient and profitable solution. It doesn’t cost that much and the return on investment is quite high, said Abu Laban.
More local and international expansions are planned. Locally, they signed a contract with Shell and Total to open up outlets in their gas stations. Internationally, they sold a franchise to a Saudi company that will soon open a Cilantro branch in one of Jeddah’s malls.
“Competition is always healthy and it forces us to be innovative, said Abu Laban, “This is why we introduced things like Cilantro Central, the Gig Guide and our new menu with items like Sushi, in order to add value to our product.
Asked whether being an Egyptian chain can be a selling point against international brands, Abu Laban replied, “We don’t like to play this game. I knew about a lot of people who refrained from going to Starbucks because of their ties with Israel, but we would never use this to sell more.
“From experience, we learned that being Egyptian is not really a selling point, she added, “a lot of our customers don’t even know we’re Egyptian. It’s the quality and prices that matter the most.
