Pour Another Cup: The Impact of COVID-19 on Coffee Shops

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Few industries experienced the devastating impact of COVID-19 as acutely as the coffee industry. Many of us watched in absolute horror as our favourite coffee shops were forced to close their doors as part of the lockdown measures, many of them permanently. As a result, an industry that many consider a huge part of their social lives is now struggling to stay afloat. Every day, we hear of another coffee spot that has gone out of business, unable to cope with the lack of a proper revenue stream. We hear of another round of retrenchments, as coffee houses battle to keep their businesses alive.

In the paragraphs that follow, we will examine the impact of COVID-19 on the coffee industry. We will also examine ideas that coffee shops can implement to help them survive through this time. Sit back and savour a cup of java as you read on.

A Cold Brewed Crisis

So, before you dismiss this article as the ramblings of some coffee elitist, consider this: the coffee industry is among the largest sectors in the world, generating an estimated revenue of $225 billion in the US alone. Coffee is the second most traded commodity on earth, behind only crude oil. With more than 2.25 billion cups consumed daily, it is safe to say that the coffee industry is essential. All of this information puts the industry’s current predicament into sharper focus. The COVID-19 pandemic has resulted in a greatly reduced revenue for 2020, with Statista estimating a decrease of at least 15% from the previous year.

As part of the restaurant industry, coffee shops in South Africa have also laboured under the restrictions of the lockdown. Hundreds of shops have been permanently forced to shut down and millions of revenue have been lost to the economy. As a result, hundreds of thousands of employees have been retrenched. While lockdown restrictions have been eased, for many establishments, this has come too late. Several popular coffee spots have already succumbed to the effects of the lockdown, including Empire Café in Muizenberg and Jason’s Bakery in Cape Town. For those who have survived, the road to recovery promises to be a long one.

Fresh Pot of Ideas

Times like these call for innovative ideas. Several coffee houses have resorted to different tactics to compensate for the lack of revenue flowing through their doors. While many of these ideas have been implemented temporarily, there is no reason why coffee shops cannot use them as a permanent part of their offering.

  • Selling of Coffee Beans: The sale of coffee beans has skyrocketed during the last few months. As customers continue to crave the flavour of their preferred blends, many coffee houses have ramped up their online stores to cater to the growing demand. This is a wonderful route to take, as coffee shops are now able to supplement their in-store revenue with an online revenue stream. Once life returns to something resembling normality, and people start returning to their favourite coffee hangouts, online sales can still prove a viable option for those who prefer their cappuccino at home.
  • Online Showcases: Why cancel an event when you can simply change the venue? Many companies have chosen to shift their showcases to various online platforms, rather than cancel their events outright. For example, Coffee Magazine has announced that the winners of their ‘A Shot in The Dark’ Competition will be broadcast via Instagram Live. Due to current social distancing guidelines, expect more coffee shops to utilize the online space.  
  • Delivery Services: If your customers cannot come to you, take your product to them. Numerous coffee shops have begun using third party delivery apps such as UberEats and Mr Delivery to get their goods out to customers. While this may be a popular option, it is not always the best method of providing goods to consumers. In previous articles, we have spoken about the steep cost of doing business via third party delivery companies. With fees as high as 30% being charged, coffee shops are caught between moving their products and seeing a large portion of their profits being handed over to these companies.

Light at the End of the Tunnel?

As of 18th August 2020, South Africa moved down to level 2 restrictions. This has allowed many coffee shops to start operating again, albeit in a limited capacity. While many owners are rejoicing at the easing of lockdown regulations, the reality is that they may not see the number of customers they’re used to just yet. The Coronavirus situation has made customers far more cautious and, as a result, many will continue to avoid public spaces for fear of contracting the virus. While there is certainly hope, this hope should be tempered with reality.

The Fresh Aroma of the UBU Marketplace

As coffee shop owners go in search of ways to attract new customers and boost sales, we’ve come up with a way to help. UBU invites companies to become vendors on the Marketplace, a virtual space where businesses are exposed to thousands of potential customers in their area and beyond. Through the Marketplace, coffee shops can connect with a bevvy of new customers without much effort.

The pay-and-deliver option places businesses in complete control of their customers’ orders, at a fraction of the cost of third-party delivery apps. UBU also offers an order-and-collect function, which allows customers to pay in advance, then pop down and collect their order. This minimizes the time that customers spend at stores. Best of all, you’re able to offer genuine cash back rewards on every purchase to your customers. It’s the ideal space for coffee shops to grow their business, during COVID and well into the future.

Looking at the current state of affairs, it is clear that the coffee industry has much to do if it is to survive the pandemic. The good news is that there are routes available to assist companies in their recovery. Have a look at what UBU has to offer your coffee shop or business. With built-in incentives to keep individuals coming back, and a ready-made system to handle all payment processes, the coffee industry can rest assured that UBU is committed to helping them survive and thrive.

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