Did an upstart coffee firm make Aberdeen landlords an offer they couldn’t refuse as Union Street became a key battlefield in an industry civil war?
Black Sheep Coffee arrived in Aberdeen in May, taking over the former Patisserie Valerie at Union Square.
It should have come as no surprise that they moved into one of the city centre’s many empty units…
The rapidly growing firm is in the midst of a massive expansion, seeking to more than double its number of branches across the UK.
But eyebrows were raised when, just hours after the new Black Sheep Coffee opened, the final customers were served at the Caffe Nero around the corner on Market Street.
- Was the timing more than mere coincidence?
- And if it was, has Black Sheep Coffee really done anything wrong?
‘Another one bites the dust…’
Rumours began to circle that Black Sheep Coffee outbid Caffe Nero for the premises, owned by Glasgow-based RRSG Properties, when its lease came up this year.
After all, it wouldn’t be the first time.
Last July, Black Sheep Coffee posted a coffin emoji alongside the phrase “RIP Caffe Nero” as it celebrated the opening of a Reading branch in its rival’s former footprint.
That’s not the only time they’ve rejoiced in grinding down their more established opposition.
The new kid on the block would quote Queen when they took over a Leeds cafe in October.
The message on Facebook stated: “And another one gone, and another one gone, another one bites the dust.
“Goodbye Caffe Nero and cheers to our very first shop opening in the beautiful city of Leeds.”
The Black Sheep branch outside Farringdon Station in London was also formerly a Caffe Nero.
Why are Black Sheep Coffee targeting Caffe Nero?
And, management at the trendy London-based upstart are pretty up front about their intentions.
There’s a section on the Black Sheep Coffee website entitled “Deal of the Century”.
In it, they reference recent Caffe Nero controversies – which could make the company a less-than-ideal tenant.
After a battering during the pandemic, the firm put itself into “company voluntary arrangement” in late 2020.
Caffe Nero hoped that this would enable them to renegotiate rents, reducing running costs and allowing the firm to bounce back after Covid.
The chain proposed landlords receive 30p for every £1 of rent they are owed, leaving high-profile tycoons like Lord Alan Sugar fuming.
How are landlords being wooed by Black Sheep Coffee?
Black Sheep bosses say their competitors’ move “shocked the nation, leaving thousands of baristas worried about the prospect of losing their jobs”.
What’s more, they say the financial quagmire could leave “hundreds of landlords disappointed with how little arrears they might recover for their sites”.
The statement continues: “At Black Sheep Coffee, we thought we would use this opportunity to step in and help out… with a recovery plan that is good for our economy and good for the soul.”
Caffe Nero landlords are then invited to complete a form – opening up takeover talks.
They’re asked to let Black Sheep Coffee know the expiry date of leases, and how much Caffe Nero is paying in rent.
What do locals make of Black Sheep Coffee taking over old Caffe Nero?
Several of our readers, reacting to last week’s announcement, took a dim view of what they deemed to be a predatory practice.
Natalie Fraser accused Black Sheep of “forcing out” the competition.
Graeme Brown said: “That’s their modus operandi… They then boast like hell on opening they’ve forced another chain out.
“Reality is they’re a chain too, with what they perceive as very clever marketing.”
So, on the Black Sheep Coffee website it says “Never fear competition, open right next door instead”. Instead of opening in one of the many vacant premises in Aberdeen they bought the building housing a Caffe Nero and are evicting them.
— Liam (@LiabilityLiam) May 10, 2023
But others were more welcoming.
Winston Brezhnev said: “It’s really good coffee”.
David Jones added: “Good to see they are trying to fill empty spaces.”
How did Black Sheep Coffee become so big all of a sudden?
At the same time as Caffe Nero was flailing, Black Sheep Coffee was busy securing £13m in funding from wealthy backers.
Mainly, this has been used to cover the cost of new shops.
And Black Sheep Coffee is seeking to make its mark on more and more towns and cities across the UK.
Wow! I can't remember the last time I had a Caffé Nero coffee, but Black Sheep coffee was always very good! Good luck with taking over the high street #blacksheep #coffee pic.twitter.com/Ay4RJuc5yT
— Richard (@RichardBeeby) December 1, 2020
It wants to increase its store count to 130 from its current tally of about 50 by the end of 2023.
And no wonder bosses are confident, it grew almost 90% between early 2022 and 2023 – raking in £8.27m as opposed to £4.36m.
‘An interesting time for the UK coffee industry’
In a recent interview, co-founder Gabriel Shohet said: “It’s a really interesting time for the UK coffee industry because the big chains seem to be running out of steam.”
The new Union Street branch is part of much wider aims.
This year, Black Sheep Coffee wants to open up in “every major airport in the country”.
They also aim to make inroads in America and the Middle East.
The company was contacted for comment.
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