Cooks Coffee Company has appointed RSM UK as administrators to its Triple Two coffee franchise business, as it prepares to shut down 11 stores
Operating out of a small office in Parnell, Keith Jackson runs a multinational café company with about 100 franchised stores in nine countries. That's as many stores as Starbucks NZ and Coffee Club NZ, combined have here.
His firm, Cooks Coffee Company, is listed on the NZ stock exchange. Yet most people will never have heard of Jackson and his business – because he doesn't sell a single coffee in this country.
He and his high-powered Kiwi board of directors had been happy to quietly expand their business – Triple Two Coffee, and Esquires Organic Coffee Company in the UK, Ireland, Pakistan, Indonesia and the Middle East – without seeking headlines.
But now the headlines have sought him, with news yesterday that his company has appointed RSM UK Restructuring Advisory as administrator of its Triple Two brand. 'Restructuring' is a misnomer in this case; the company will be closing its 11 Triple Two cafés in the south of England.
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Cooks Coffee had acquired Triple Two just three years ago – but its city centre stores have been hard-hit by the aftermath of the UK's Covid lockdowns. "It didn't quite work out in the way that we had hoped," says Jackson, the company's executive chair.
"If you boil it down, this was related to Covid and our stores' locations. The step changes that have taken place have become permanent changes to behaviour in the market. The five-day week is now a three-day week, and people aren't coming into the office. Quite a few of the sites were CBD sites and they were impacted by Covid."
Cooks Coffee started as a New Zealand company in 2008, but as of last year, it's dual-listed both here and in the UK. The announcement of the appointment of the administrator was made this week to the NZX and Aquis Growth market, a London equity exchange designed to meet the needs of small and mid-cap issuers.
‘It's very disappointing that we've had to do this. It was certainly not our intention when we acquired the business.’ – Keith Jackson, Cooks Coffee Company
At 74 and expected to step back from an executive role next year, Jackson explains to Newsroom that despite Triple Two's failure, he's confident the company is well-placed for further expansion – perhaps even back into his home country of New Zealand.
It's well represented at board level here. Other directors include well-known advertising guru Mike Hutcheson, Arvida founder Michael Ambrose, and experienced Metlifecare and Pacific Retail Group chief financial officer Paul Elliott. But it's just appointed its first UK director, Elena Garside, as it focuses on the northern hemisphere.
The company's main brand is Esquires, which has franchises in all nine countries – 55 of those stores are in the UK, and 16 are in Ireland. It's about to open two more in Saudi Arabia, where its outlets are based in universities, banks and at the new Jeddah airport. The numbers go up and down – at one point there were more than 120 stores.
He admits selling coffee to the Middle East is rather like shipping coals to Newcastle – but he says the coffee market is changing.
‘In the coffee space, Australia and NZ are leading the way. Most people would say Melbourne is a cultural hub of coffee, and then it's a battle for who's next – whether it's Auckland, Wellington or Sydney.’ – Keith Jackson
"You've got to serve the traditional coffees, but what's changing is particularly with kids going overseas to study and people travelling a lot, is a coffee revolution. It was started off by Starbucks and then picked up around the world. The younger people are really picking up on those Western trends.
"In the coffee space, Australia and New Zealand are leading the way. Most people would say Melbourne is a cultural hub of coffee, and then it's a battle for who's next – whether it's Auckland, Wellington or Sydney."
The Esquires brand started in Canada. But in a strange twist of history, the Kiwi who bought the rights to operate Esquires in New Zealand, Australia and Europe was then forced to split them apart when his marriage broke up.
Using Cooks Coffee, a shell company that was no longer trading, Jackson and his business partners bought the European business, in the hope they might subsequently obtain the New Zealand and Australian business as well. But that never eventuated, and Esquires NZ was eventually onsold to Café Coffee and Bakery Systems (NZ) Ltd, which has 20 stores nationwide.
Esquires NZ's brightly lit, cheap and cheerful inner-city diners are very different operations to Cooks Coffee's UK and European cafés though. "I think that you'd be very happy to take your family in to any of our stores in the UK," Jackson says, diplomatically. "Certainly, I would be."
Esquires NZ, by contrast, markets itself as welcoming "everyday Kiwis". Its website says: "Just so you know, we are not coffee snobs."
The franchisees of Esquires UK and Ireland may not consider themselves to be coffee snobs either, but theirs is a premium organic offering, operating out of cutesey Kiwi-designed stores in market towns across the two countries. "There are two focuses: ethical and local," Jackson says.
‘We've got about one café per 500 people here in New Zealand, whereas in the UK it's one for every 2200. So the opportunity is huge for the Esquires brand.’ – Keith Jackson
Its Caerphilly franchise, in Wales, has just won the award for Best Sustainable Café Chain at the Welsh Enterprise Awards.
"As a franchise model, we've got local people running them, so they've typically invested, in Kiwi dollars, around about half a million. That's not inconsequential. These people are part of the community."
Because their Esquires stores are in smaller communities, not inner cities, they haven't been hit by the post-Covid depopulation of the cities – unlike their sister company Triple Two in central London, Soho, Camden, Swindon, Reading and the like.
Because of Triple Two's troubles, the company reported a $3.3 million net loss before tax this year. That's because of the write-down of receivables and impairment of goodwill and intangible assets relating to the Triple Two business.
Now it's closing down the 11 Triple Two cafés. "It's very disappointing that we've had to do this. It was certainly not our intention when we acquired the business. But you get to a point when things change. So we took the hard decision to deal with the issue permanently and move on."
Despite the retrenchment, Jackson insists the company is open to new expansion opportunities. "We've got about one café per 500 people here in New Zealand, whereas in the UK it's one for every 2200. So the opportunity is huge for the Esquires brand."
Until now, its forays into New Zealand have been small-scale, short-lived or unsuccessful.
In 2018, it negotiated a conditional agreement to buy the Mojo coffee chain for $19m, but that fell over after Cooks failed to raise the capital needed.
Previously, Cooks Coffee owned a food brand named Scarborough Fair, selling tea, ground coffee, chutneys, relishes, sauces and some Mediterranean-style foods. But it sold that in 2020, to Auckland-based Toasted Coffee Roasters.
Some 84 percent of the shareholders are based in New Zealand, collectively owning 54 percent of the company. "The share price hasn't been quite going in the direction that we wanted to. We think a lot of that has to do with the fact that we haven't got anything here."
Clearly, the long-haul flights between New Zealand and the northern hemisphere businesses must be draining – so would Cooks Coffee Company reinvest in New Zealand?
"You never say never."
