Businessman Marius Ghenea, who has developed his business aroundonline retail, closed the Testa Rossa coffee shops in LibertyCenter and Baneasa Shopping City in Bucharest and is to look forstreet front space to implement the concept he brought on theRomanian market in the second half of 2008.
"I saw in the first few months of the year that putting coffeeshops in malls is not the right thing to do at this time, becausetraffic is very low. We decided to close. As an entrepreneur youhave to realise it is time to accept losses, as well, and we aretalking here about costs that we can no longer recover, such asthose pertaining to the furnishing of the space, to promoting thelocation," Marius Ghenea told ZF. He will not drop the brand,though, but will relaunch it in a street front version in 2010. Theclosing of the two coffee shops in which he had invested 450,000euros in less than one year caused Ghenea a loss he "we would notcommit to paper yet", but which can be regarded as one of the fewhiccups in his business, considering he has only grown his owncompanies, selling those that reached maturity.
The decision to close the two coffee shops in malls was made asa result of the decline in traffic and implicitly in the sales ofthe company.
"We are in talks with several owners for street front space, buthave not signed any contract yet. We have also had propositions togo to other shopping centres, but realised results there were verypoor. Well chosen street front locations are the solution," saidMarius Ghenea, who admits that he will open a coffee shop in thefirst part of next year at the earliest, while the rest of theshops will be launched based on a "look before you leap"principle.
Italian Coffee Concept, the company used to introduce the TestaRossa brand in Romania last year announced it would open eightcoffee shops in three years. Ghenea says he will stick to the planbut starting with 2010, which he sees as slow for coffee shopbusiness as this year.
"Consumers will refrain from making expenses that are notstrictly necessary. If funds for relaxation and leisure are notcompletely cut, they will account for a lower share in theRomanians' purse, which will not be as full as before. However,coffee culture is only beginning, which is why the market mightgrow over the coming years," Ghenea believes.
Many entrepreneurs have started to really consider thepossibility to relocate some shops from shopping centres because ofthe sharp decline in traffic.
Dragos Petrescu, owner of the City Grill restaurants, Carul cuBere, Hanu' Berarilor, Buongiorno and of the City Cafe coffeeshops, whose turnover stood at about 15.2 million euros in 2008,has recently announced that the development of his business will bedone only by opening standalone cafes, without considering shoppingcentres, where he has closed unprofitable shops and will no longeropen anything, not even if (offered the space) "for free".
Other players decided not to go to malls from the beginning,with Tudor Niculescu of Turabo and Florin Balu, owner of SnackAttack fast food chain, being just two of those that have expandedin street front locations and considered office buildings as anoption.
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