Cyprus Mail

Economy may have taken roasting, but one business full of beans

By Nadia Sawyer

When the economic recession first hit Cyprus four years ago, the most noticeable sign that the country was experiencing a financial crisis was the closure of restaurants and retail outlets. It affected every type of business, in every town and on every street. As one business shut up shop so did the one next door, creating a domino effect that rippled around the island. But then something strange happened. Seeds of new businesses were sown in the ruins of the old. More international chains came to the island, business savvy Cypriots entered into new franchise agreements and even private individuals jumped on the bandwagon. They all had one thing in common – the black stuff – bubbling up and frothing away on the surface, while emitting a very familiar odour. No, not the dreamt of oil, something a lot more palatable – coffee.

Although the coffee shop culture has always been prevalent in Cyprus, today there are literally hundreds of coffee shops across the island, sometimes more than half a dozen in a single road and often clustered together like bees round a honey pot. But what fuelled this extraordinary business growth in a country that was experiencing a severe credit crunch?

Unwittingly opening their respective coffee shops at the beginning of the economic downturn, Pavlina Lena and Foulla Charalambous, already successful business women in other fields, took two very different approaches. Lena opted for the Austrian franchise, The Coffeeshop Company, and Charalambous decided to create her own version of a coffee shop. “I wanted to be the one making the decisions”, she said.

The advantages of a franchise include brand name recognition, tried and tested products and pre-opening advice from the franchisor, including shop design and site selection. “At that time, Themistocles Dervis Street in Nicosia was considered a prime location,” said Lena, but admitted that the knocking down of several small shops into one large one and the associated renovation and refitting was a very costly process. Nevertheless, she was confident that consumers would be attracted to a franchise where they could expect a certain level of quality and consistency. She conceded, however, that one of the disadvantages of being a franchisee is having to make ongoing royalty payments to the franchisor.

Charalambous, on the other hand, was not tied to the mandate of a franchise agreement and centred her coffee shop around the additional offering of American pastries. Currently faced with mounting competition in the Ayia Paraskevi area of Nicosia from European-style coffee chains and franchises, Charalambous is in the process of renovating her shop and changing the name to the Italian-sounding Il Santo Bevitore, from which she will also offer ice cream, alcohol and food platters. “I am hoping this will bring in even more customers,” she said.

But who exactly are the customers, especially when so many people are still out of work?

“I think the reason for the coffee shop boom was actually due to the large numbers of unemployed people with nothing to do,” speculated Charalambous. Lena agreed. “Although people have cut down on their expenses, coffee shops are still the cheapest form of entertainment,” she said. “Even unemployed people have enough money for a cup of coffee and can sit there for hours”.

Free wifi with your coffee
Free wifi with your coffee

“Where else can you get free Wi-Fi, free heating or air conditioning, play cards or board games and watch sports on a big screen, all for the price of a cup of coffee?” asked Charalambous. She also suggested that there is no particular age demographic for coffee shop customers.  “At my shop, they range from 19 to 65, and happily sit next to each other,” she confirmed.

Both ladies also cite another reason for the popularity of coffee shops – the Cypriot mentality. “Cypriots like to be where other people can see them,” said Lena. “They also like to follow fashion”. Whereas in the past, this practice may have occurred at restaurants and tavernas, today the cheaper option of the coffee shop is de rigueur.

Nowhere is this more obvious than in the Engomi area of Nicosia, near McDonalds and the Alfamega hypermarket. Clustered along a slip road set back and running parallel to the dual carriage way of Griva Digeni are five coffee shops, including the US franchise Coffee Beanery, the UK franchise Costa Coffee, the Australian franchise Gloria Jean’s, the Canadian franchise Second Cup and the Swedish franchise Wayne’s Coffee. On the opposite side of the road is the UK chain Caffè Nero, occupying the building of what was once one of the most popular places ‘to be seen’, Blinkers.

But what caused this strange phenomenon in Engomi? Sue Nicholson, a resident of the neighbourhood for more than 20 years, has a number of theories. “It’s a centrally-located, open area with trees and places to park”, she said. “In the mornings, I used to see men who had probably been made redundant in these coffee shops. Now I see trainers and sportsmen from the many gyms in the area”.

Lena has a different hypothesis, believing that the area benefits from being close to universities and the large residential area of Makedonitissa, thereby serving students and a population that may be dissuaded from travelling to the centre of Nicosia, due to the building works at Eleftheria Square and the associated lack of public parking spaces, as well as the demise of Makarios Avenue.

Charalambous, on the other hand, thinks that these Engomi coffee shops situated close together work well because “if one is full, there is always another one to go to”.

However, Lena and Charalambous both believe that the coffee shop market has now reached saturation point and offer some warning to those thinking of getting into the business. Lena says that although the most popular franchises tend to be those originating from the UK and the US, where people have studied and have become familiar with brand names, the start-up and operating costs are high. On Themistocles Dervis Street, there is also competition from the Greek franchise Coffee Island (which, according to Lena, requires much less of an investment), the larger chain Starbucks and several privately run coffee shops.

“I would ask anyone thinking of opening a coffee shop two questions. On what grounds are you opening your shop? What research have you done?” she cautioned.

Charalambous says that so keen are some people to get into the business, they often do so without obtaining the appropriate licences. “I know of two coffee shops in my area that have closed for this reason”, she said. In addition to the right approvals, Charalambous believes that the municipalities need to exercise other forms of control, offering guidance to coffee shops, particularly where there are several on one street.

“In Madrid, for example, they let them utilise the pavements, but make them use the same type of flowers and lighting”, she said, explaining that this makes the street look more aesthetically pleasing. Indeed, for the customer, this could be an important criterion, along with other factors.

“Not only is the quality of the coffee important – the standard of the furniture, the cleanliness and the service of the baristas are taken into consideration when we, as consumers, choose a coffee shop,” said Nicholson, agreeing that, at the moment, they are more than spoilt for choice.

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