Double blow: $350k owed as Coffee Clubs close
National cafe chain Coffee Club has been hit with further store closures, with two outlets shutting their doors in the Queensland sugar city of Bundaberg.
Liquidators have been appointed to Hellship, the franchisee who operated Coffee Club outlets at the city's Sugarland and Hinkler shopping centres, with creditors owed an estimated $350,000. The cafes employed between 15 and 20 casual staff.
Liquidator Frank O'Neill, of SV Partners, said Hellfire had made the tough decision to close the two cafes after operating them for more than 20 years.
The company had faced a slump in customers during COVID-19 and could not afford unsustainably high rents.
"It was simply not viable to continue trading in these unprecedented times," said Mr O'Neill. Mr O'Neill said he was working with the landford and Coffee Club to get the stores operational over the Christmas period.
On Thursday, the Coffee Club confirmed that its cafes in Bundaberg temporarily closed on Friday 18th December.
The Sugarland Bundaberg store re-opened on Christmas Eve.
"At this point in time we do not have a confirmed reopening date for our second Bundaberg store," a spokesperson said.
"The Coffee Club apologises to the loyal customers who may be impacted by this temporary closure, and will continue to keep VIP customers updated on the status of the second store opening."
Brisbane-based Coffee Club earlier this year rolled out a rebranding of its outlets to make itself more relevant to younger customers. But it has faced a series of store closures in the past few years as franchisees struggled to make ends meet.
Separately, a former Coffee Club franchisee is suing the restaurant chain claiming losses of up to $1.4 million after it opened a rival outlet in the same Gold Coast shopping centre.
Jeremy Swift, who operated the Robina Coffee Club for more than a decade until last year, says the chain opened a store called First Ave immediately above his own business in the Robina Town Centre with similar decor, menu and coffee. Coffee Club had denied the claim and has lodged a defence.
The Coffee Club, which is now owned by the Minor DKL Food Group, started in Brisbane in 1989 and now has more than 400 stores around the world.
Earlier this year, the group warned that the COVID-19 shutdown had impacted on Coffee Club's contributions to the group with revenue dropping between 70 and 75 per cent.
"It is not possible to estimate the impact of the outbreak's full short term and long term effect," Minor said in its annual financial statement lodged with ASIC in May.
QUT retail expert Dr Gary Mortimer said the closures reflected the challenging nature of franchising in the current economic environment. "If you are running your own cafe, you only have to worry about your own overheads, wages and lease," said Dr Mortimer. "But if you have a franchised shop you have marketing fees and other levies to worry about."
He said Bundaberg's economy would have suffered through the COVID-19 pandemic as tourism numbers to local holiday hot spots such as Bargara and Mon Repos slumped.
Originally published as Double blow: $350k owed as Coffee Clubs close