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Coffee shops hot property for commercial real estate owners

By: Chloe Winter

Source: businessday

"The larger, more established roasters may have more available capital to fund property purchases."

Gichard's business, which is one of New Zealand's largest provincial coffee roasters, leases its roasting space.

"Most roasters generally only need one wholesale roasting site, depending on roaster capacity. Ozone Coffee Roasters has roasting operations in New Plymouth and London," she said.

"From these premises, we can supply customers in New Zealand and Europe.

"Some operators are purely wholesale roasters, while others compliment the wholesale business with a retail cafe component or roast purely for their own business."

Although New Zealand was "highly saturated with roasters", there was still room for growth, and new roasters would continue to enter the market, Gichard said.

However, she predicted there would be consolidation in the industry as businesses matured and began seeking to grow through acquisition or mergers, she said.

Per capita, New Zealand has one of the highest rates of coffee consumption in the world, with Kiwis drinking 0.94 cups of coffee a day – more than Australia and the United States.

Kiwis spend, on average, $13.67 a week on coffee from coffee shops, and, according to research, most will go out of their way to get the best cup possible.

Church said property could also be deciding factor in how much Kiwis pay for a cup of coffee.

Raglan Roast, which serves up to 8000 cups of coffee a day from nine stores across the country including Wellington, charges as little as $2.50 to $3 for a takeaway coffee.

The owners' decision to buy the properties, rather than lease, has helped keep costs down.

Company founder Tony Bruce said: "Years ago, all the old-school business guys would have said something like, 'Stick to your roasting and worry about the property side of your business'.

"But I think tenure is important, and that committing to a site is better than leasing it. And by owning the property, you also have the option to lease it out if your own business turns to custard."

There was just a few percentage points difference between buying a property and leasing it, Bruce said.

"I feel more comfortable calling the shots. And funnily enough, a lot of those same old school business guys are all now advocating owner-occupy."

Raglan Roast has been running its logistics operation out of Raglan, but is now moving that side of business to an industrial space in Hamilton's commercial hub of Te Rapa.

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