You would think, if you had a nice-looking, recently done-up Nisa store in North London’s Islington, that coffee could well be a go-er.
Certainly, Raji Arulkumar thought so, and so did international coffee company Tchibo. It launched its profit share scheme late last year and before signing customers up it does a proper site assessment to ascertain the suitability of the premises. It has about 76 sites so far and all seem to be doing well in Raji’s situation things looked promising.
But it’s a new gambit and some will fail, as the experiment unfortunately did in her case.
The business was only managing between two and four cups a day and Raji was dismayed to get invoices that charged her a minimum rate of 10 cups per day.
As the invoices mounted up, her business was going down and by the time she rang me they totalled nearly £1,800 and she was receiving debt recovery letters. The business is on the market.
When I rang Tchibo the company pointed out that its contract clearly states the minimum requirement, the reps visit regularly and the company helps to promote the coffee. I asked for the worst case scenario and learnt that if the contract was cancelled there would be another £4,500 to pay in termination fees and a machine uplift fee of £600.
However, and it’s a big however, after some discussion the company concluded that no one was going to win. (And in all fairness, since the company had assessed the site thoroughly and thought it would work it therefore should take its share of the responsibility for the outcome.)
Raji was offered two options and she has opted for the one that requires her to pay her invoices, but waives the cancellation fee. I applaud Tchibo for this decision- it had its contract in black and white and could have stuck her for far more. And, as this column frequently reports, many companies are less fair and less sensible.
So I hope it - and its customers - succeeds in its profit share venture because, like all good ideas, the market is already getting crowded. Costa is everywhere and Starbucks is seeking franchise partners.