Coronavirus: Coffee shops battle to stay in business amid pandemic

Click to play video: 'Coffee shops battle to stay in business as Ontario residents told to stay home'
Coffee shops battle to stay in business as Ontario residents told to stay home
WATCH ABOVE: With Ontario residents urged to stay home except for essential work and trips like medical appointments, the food and beverage industry is in crisis. The coffee shop segment has been allowed to stay open, but business has still been challenging for many. As Seán O’Shea reports, many independent operators are hanging on by adapting. – Feb 3, 2021

Shane McPherson stops to talk to a reporter in front of the Starbucks location on Front Street East in downtown Toronto. Two days before the store is scheduled to close permanently, McPherson offers an opinion about what’s going on.

“I think they flooded the market too much. It’s time for other local stores to take over,” McPherson said.

American coffee chain Starbucks is closing 300 Canadian store locations by March. The company says it plans to focus on new drive-thru locations, more delivery, and additional curbside pickup-only coffee shops.

Since the World Health Organization declared the COVID-19 pandemic on March 11, 2020, the food and beverage industries have been hit hard. Bars and restaurants in Ontario are prevented from seating customers and are limited to take-out and delivery orders only.

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Coffee shops can legally serve customers indoors although patrons cannot sit at tables or remain inside to eat or drink. Even so, consumers have drastically reduced how much they spend on the coffee market.

“The cost of COVID to me has been a decline in sales,” said Sameer Mohamed, who owns four Toronto coffee shops under the Omnia Coffee and Fahrenheit brands.

One of the stores is temporarily closed until pandemic restrictions are lifted.

In spite of tough times, Mohamed recently opened his newest location on Queen Street East on the site of a former auto body shop. He told Global News that while fewer people are traveling to offices or going out for social purposes, customers still want to grab a coffee.

“Working from home, I believe people need an escape — a place to go that feels like an oasis where people know your name,” said Mohamed.

Mohamed’s newest location includes an open space in the rear of the building where he can roast coffee beans. He has established a wholesale coffee business to help bolster his revenues.

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Other independent coffee retailers are also adapting to the realities of fewer consumers spending money every day on coffee.

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“We had to adapt. Otherwise, we would have closed the whole business,” said Firas Arafat, co-owner of Page One on Mutual Street.

In a May interview with Global News, Arafat wondered how he could generate enough revenue to pay the rent and pay staff. The answer? Sell more than just coffee.

“COVID … forced us to let go of things we were used to and comfortable with,” Arafat explained, standing in front of a fresh inventory of pastas, gluten-free gnocci and pesto made in Italy.

The gourmet food products are stacked on shelves previously occupied by vintage typewriters, removed to make way for grocery items not available at the supermarket on the corner. He can also legally sell beer and wine to customers.

Also, each Wednesday afternoon and Sunday morning, Page One is now home to a farmers’ market in the space that would otherwise seat guests. The initiative has been a hit with residents of the building and many who live in the surrounding neighbourhood.

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“A coffee shop is not just about getting your cup of joe, it’s about having a great experience,” said Joel Gregoire, associate director of Mintel, a company that focuses on consumer research.

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Gregoire says the companies best able to “weather the storm of COVID” in Canada are the top three brands: Tim Hortons, McDonald’s, and Starbucks.

But Gregoire acknowledges that independent coffee shops may be benefiting from neighbourhood campaigns encouraging customers to buy local now.

“If you’re giving consumers a great experience, you’re changing with the times, you’re building your relationship with them, that’s going to bode well for them,” said Gregoire, who focuses on the food and beverage sectors.

At Omnia, two women have travelled from the other side of Toronto to check out the new coffee shop, bathed in natural light with a cluster of large Italian and Japanese motorcycles serving as decor past the front door.

“I truly believe it’s better quality when it’s independently-owned,” one of the women said before taking a sip of espresso.

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