Adrian Maizey on the coffee business and managing to expand Starbucks in SA during the pandemic

Adrian Maizey, founder and CEO of Rand Capital Collection, knows all about business risk and overcoming challenges.

Two months after they bet on a global brand and took over the license for Starbucks in South Africa, the COVID pandemic hit.

Born in Pretoria, but based in Los Angeles, Maizey says he will always be a South African.

He tells Stephen Grootes how Rand Capital managed to actually grow the brand even while other businesses were being pummeled.

Taste Holdings first acquired the local license for the world's largest coffeehouse chain in 2015, but sold to Maizey's company in 2019 when they failed to reach scale.

"I think the brand was doing well back then, but Taste was getting itself into trouble. The 13 stores we bought in 2019 were beautiful flagship stores, some of the most beautiful in the world."

While Taste set up the brand for success in South Africa, what they didn't have and what they needed was time to build a diversified portfolio that could sustain whatever variables came over time, Maizey says.

"What I saw in it was potential and an opportunity to get something that we could grow and build a dream around for South Africa and in South Africa."

Being hit by COVID two months in, dramatically increased any need to diversify and expand, Maizey says: "The lesson there was that we needed smaller stores in locations outside of malls, inside of grocery stores, etcetera."

And expand they did, even as the pandemic wreaked havoc on the business environment.

"We'd just capitalised the business and we leant forward - we had no choice; we were in and there was no chance to pull out. I said let's grab land while we can, so while the tide was out we dove in."

Within the first 18 months of the pandemic they built 33 stores from a base of 13 that had been built over five years.

This rapid expansion gave Starbucks SA the scale they "desperately" needed, and a lot of market share.

"For an international brand of this size with the quality that is Starbucks, you do require a significant amount of overhead and that has to get funded one way or the other - and if you aren't using somebody else's money you need a bunch of stores to generate the cash flow to do that. The scale not only helped us cover that overhead, but get a lot better seat at the table with our suppliers and stakeholders, so that was the key."

From experience, Maizey can say that coffee is one of the most complex businesses there are to run. He cites the number of line items they need to procure, most of which are imported, the complexity of ensuring correct stock levels in a large country like SA and complex training for staff.

"There are something like 80,000 drink variations... and when I look at other businesses today this has been a great learning ground for how to run a supply chain. It takes months and months of planning... Your menu has to change as the market changes, and the youngsters of today certainly dont drink the coffee that you and i may be drinking,"

The innovation that Starbucks is so good at is really the differentiator for them, he says, along with the sheer size of the company behind it all.

"Our revenue is generally far higher than any other coffee competitors that you may reference. They might be brilliant at what they do, but we have got the clout of a very large machine behind us that can innovate and stay in touch with what's going on in the market at a much larger scale and at a quality that's pretty hard for others to replicate given the logistics function that's required to procure all these ingredients around the world."

What does keep them up at night is figuring out how to get products through South African ports in time, Maizey says.

As he puts it, "we have a lot of our capital sitting on the ocean".

Scroll up to the audio player to listen to the in-depth interview