Starbucks in Prague - Meet the competition...

I wasn't really planning on posting anymore about Starbucks, but finding out that Starbucks will soon be opening it's fifth store already made me change my mind. I only know of four stores - the original on Malostranska namesti, the second in the Palladium Mall (which opened a day before the fateful fire there), the third in Terminal 1 at Prague airport (which opened on March 20), and a new fifth store to be opened at the Avion mall at Zlicin. I don't know yet where the fourth store opened.[Note: I know Zlicin but didn't know the name "Avion Mall". When I googled it I found a mall by that name in Bratislava. So it's possible that the name of the mall is wrong in the article.]

Anyway, the Prague Monitor today has an article on Starbucks and its Czech and other European competitors. I feel that, just like in the States, while there is room for several premium coffee chain, Starbucks will become the "big dog" in the Prague market.

Coffee chains gearing up for tough rivalry in Czech marketBy Jiří Fencl / E15 / Published 21 May 2008
Translated and adapted with permission by the Prague Daily Monitor

The world's largest coffee chain Starbucks, which entered the Czech market only in January this year, is growing fast in the country. A mere four months after it opened the first cafe in Prague's Malostranské náměstí, it is now opening its fifth branch in the Avion Shopping Park in Prague-Zličín.

But for now, local coffee chains can cope with the fierce competition of US chains, including Starbucks' sister KFC and the McDonald's network. For instance, Czech coffee chain Café Emporio more than doubled operating profits year-on-year in 2007, said Emporio chief executive Vladimír Staněk. The company is reluctant to disclose precise data for now.

"Theoretically, it is not a problem to open one shop after another. But every new cafe is a bit of a lottery, particularly as regards the choice of the location. Our chain underwent considerable restructuring in 2007, including the windup of several regional branches which failed to meet the investor's demands," Staněk said.

"Owing to this, we are able to improve our business results relatively fast this year. I think a number of rivals are still facing a similar slimming therapy," he added.

Emporio is getting ready to start another expansion wave, just like the Polish chain Coffee Heaven. The Czech market is the second most important one for this chain, whose chief executive Nikolaos Balamotis says it will not hesitate to open new cafes either.

Coffee&Co is opening new shops at the Tesco store in Karlovy Vary and at Zlaté jablko in Zlín as of May. "We are also planning to open a new cafe in the centre of Prague soon," said Miroslava Vatajová, marketing director at Coffee&Co. "Our goal is to open a new branch roughly every month," said Vatajová.

The strong McDonald's chain is aware of the new rivals, but it is planning to open its own chain, McCafé, all the same. "I think Starbucks will also attract a slightly different segment of customers," McDonald's ČR communications director Drahomíra Jiráková said in January, when Starbucks opened the first branch.

German chain Cup&Cino is allegedly also on its way to the Czech market. Incoma advisers say this is the ideal time for coffee chains to expand.



As a side note, we actually tried a McCafe when we drove to Berchtesgaden last fall. Apart from a language problem, I found the concept and experience to be intriguing. The McCafe was in the store, but its counter was completely separate from the food counter. McDonalds has so many stores that expanding into upscale coffee will cost very little and offer the opportunity of significant increases for revenue and profit. Many people go to Starbucks for not only the coffee but also the laid back atmosphere and wi-fi, but for those who are accustomed to premium coffee may start buying it at McDonalds if it's fast (and maybe a little cheaper).

Starbucks in Prague update...

The blog receives quite a few hits based on google searches looking for information on Starbucks in Prague. I'm not sure why. But, always give the customers (even nonpaying customers) what they want, so here is an update on Starbucks stores in Prague.

The first Starbucks opened on Malostranska namesti back in late January. I obviously have no access to company records but based on anecdotal information from friends and our own observations, this location has been very successful. Even opening at the absolute low season here in Prague it has always been busy when we have been there. Business this weekend should be booming with hordes of tourists (mostly from Europe) visiting Prague over the long Easter weekend. The cool weather and snow flurries should also help hot beverage sales.

The second Starbucks opened in the Palladium mall last month. Unfortunately, the day after they opened the mall experienced its fire which closed the mall for weeks, reopening just within the last few days. The Starbucks at Palladium was doing a good business yesterday afternoon and it would seem to be a good location assuming no more serious problems at Palladium. It is located one level below the main entrance, so you see it right away when you enter, but you have to go down a level to reach it.

The third Starbucks has opened at the Prague airport in terminal 1. I haven't heard anything about this location yet - other than it is open.

I will post when I hear of additional locations, which are expected to be numerous.

Visit to the Prague Starbucks...

This morning Kathy and I dropped Noah off at Sunday school at 9:45 and then headed over to the first Starbucks in Prague just across the way which opened on Tuesday. We usually either go for a walk or stop somewhere for coffee so today we thought we would have our coffee at the new Starbucks.

Lots of other Sunday school parents had the same idea and there ended up being about 10 of us there.

The experience was OK, but then I don't really understand all the fuss over Starbucks. There were only a couple of people ahead of us in line and within a minute or two we were able to place our order - a tall (i.e. small) caramel machiatto for Kathy and a grande (i.e. medium) white mocha cafe for me. The total was 200 Crowns, or about $12. That seems a bit pricey, but before the recent fall of the dollar that same 200 Crowns would only have been about $9 (better, but still pricey).

The service at the counter was good and the coffee was prepared quickly. We retired to the main room, which was appointed similar to all the others. Soft jazz was playing on the sound system. The wall color was a warm peachy-yellow-orange.

As for the coffee itself, I thought it was just OK. It didn't seem noticeably different from what we get at Coffee Heaven, a local high end coffee chain in Prague (where the two coffees we ordered would probably cost 20% less).

The view is probably better than most Starbucks. The location is in a corner of the building, so there are windows on two sides.

The clientele seemed to be mostly tourists and expats with a few local Czechs thrown in. I expect that is what they are shooting for, but of course the more Czechs the better.

All in all I was underwhelmed, but on the other hand it is nice to have a place better than McDonalds to get a taste of home.

First Starbucks in Prague opens...

I know that I have been spending a lot of time on the first Starbucks to open in Prague, and I'm not really sure why. I have been to Starbucks, but prefer Caribou, and in any event don't spend a lot of time in coffee shops. I usually have a single cup of coffee at home each day and that is pretty much it. The arrival of Starbucks in Prague - the first store opened yesterday - is more of a cultural than culinary event. It reflects the complete dominance of American popular culture through the world. (Now if we could only get Taco Bell to open in Prague I would be the first in line on opening day).

Czechs by nature do not consume mass quantities of coffee from half-litre sized cups. To the typical Czech, coffee is something that is served after a meal and comes in a very small cup (think espresso) with perhaps a little cookie. That's it. For Starbucks to be successful beyond the tourists and foreign workers the culture of why and when Czechs drink coffee will have to change.

Obviously, Starbucks has moved into other countries with the same local perception of coffee, and has succeeded. So I have little doubt that 5 years from now Czechs will view coffee as Americans do.

Starbucks was quite clever, in my opinion, to take a location that long ago served as a cafe/coffeehouse for young writers and wresting it from a popular restaurant (Square, on Malostranka namesti as I have previously posted). I am sure it was expensive to do, but it is a way to get Czechs to mentally associate Starbucks with their own heritage

Here is a report from yesterday's Financial News:

“Starbucks takes great pride in announcing it has carefully and thoughtfully rehabilitated the Palác Grömlingovský retail location and returned it to its historic use as a coffeehouse and gathering place for the local community,” said Cliff Burrows, president of Starbucks Europe, Middle East, and Africa. “We are thrilled to welcome the people of Prague back to the Palác Grömlingovský to enjoy Starbucks finest coffees in the location they have known and loved for years.”

“Many steps have been taken to ensure that the physical space was restored respecting its original architectural features,” said Jakub Strestik, operations director for Starbucks Czech Republic. The 270 square meter location was originally established as a coffeehouse in 1874 and it remained a destination for local literati, scholars and neighbors for decades. The renovation includes restoration of the original flooring, use of recommended paint color palettes, maintenance of all existing windows, and design and installation of subdued exterior signage in keeping with the ambience of the town square. Starbucks will also introduce programming at this store that will allow customers to enjoy include book readings, book releases, and other arts and literature related events.

Starbucks in Prague - Update...

Our church, St. Thomas, is less than a block from where the first Starbucks in Prague is going on Malostranska namesti. So after dropping Noah off at Sunday school I took my usual walk, but swung by the site to snap a few pictures. Here is a look at where it will go. In the bottom picture you can see the orange sign. I have heard that the opening date is January 24th.

Is this progress? Starbucks coming to Prague...

The Prague post reports that Starbucks will open their first Prague store by the end of January. The location is a prime spot on Malostranske namesti ("small square" that is a short walk from the Charles bridge and is in the cnter of the tourist district. We have heard about this for some time, but this is the first confirmation we have seen.

Interestingly, the restaurant that had been where the Starbucks is going, called Square, is where Kathy and I went with Nick and Mary when they visited in October. Kathy and I were at Square a half a dozen times and always enjoyed the food and the atmosphere (although it was a little too upscale to visit regularly). I think that Square was reasonably successful so Starbucks must have paid a pretty penny to get the location.

Starbucks to open in Prague by the end of January
Chain's first location will be in historic coffeehouse
Starbucks will open its first café in Prague at the end of January, Finanční noviny reports.

The Seattle-based chain of cafés signed a joint-venture contract with AmRest Holdings N.V. to launch and manage its fleet of cafes in the Czech Republic, Poland and Hungary. The Netherlands-based company operates 252 chain restaurants in Central and Eastern Europe, including KFC, Pizza Hut and Burger King.

The first cafe will open on Malostranske namesti in the Gromling Palace, which AmRest plans to renovate and turn into a neighborhood venue. The location has a storied history – it was formerly a popular Old Town kavarna for Czech writers and philosophers.

Starbucks, which has over 15,000 cafes in over 40 countries, wants to open 20 cafes this year in the Czech Republic, Poland and Hungary and also plans to enter the Bulgarian and Polish markets.