Starbucks Signs With New NZ Partner

coffee chain's previous license holder said that it will not be renewing its twenty-year-old deal in a country where an ingrained coffee culture is making it a challenge for the world's largest coffee company to prosper.

According to a report by Reuters, fast-food group Restaurant Brands New Zealand Ltd. stated on Monday that it will let its license deal expire in October, whereas Starbucks will continue its operations under the Tahua Capital license which had acquired the permit for a price that sums up to NZ$4.4 million or US$2.9 million.

In a statement, the former license holder said that the coffee chain was "becoming less relevant to the company's overall direction." Restaurant Brands also said that it wants to focus on its core business of quick-service restaurant brands such as KFC and Pizza Hut.

Brian Gaynor, head of Auckland-based Milford Asset Management, said Starbucks was not able to deliver their expectations in New Zealand. "They had aspirations for it a long time ago when they acquired it first, and it's never been achieved because they're up against local competition from either individual coffee shops or local chains."

The sovereign island country has a vigorous coffee scene that made sheer competition for prime chains such as Starbucks, which first brewed its coffee in the country in 1998. The country is brimming with numerous small coffee shops that sell single origin espresso and drip coffee, while major roasting chains such as Mojo Coffee and Fuel Coffee are everywhere, even opening branches in China.

Restaurant Brand said the refusal to renew its deal with Starbucks, which have contributed less than 4 percent of the license holder's total sales and profits, was expected to cause an impact on the current year's net profit of around NZ$1.3 million, excluding non-trading items. Furthermore, the previous license holder said that Tahua Capital, established to buy the assets of Starbucks New Zealand, will be securing leases for Restaurant Brands' 22 Starbucks stores as well as employ all 300 existing Starbuck employees.