The company that owns the Bewley's Oriental Cafe chain in Ireland has warned that it may have to close its flagship outlets in Grafton Street, Dublin's main shopping area, and Westmoreland Street as they struggle under the impact of competition from younger rivals such as O'Brien's and Cafe Sol.
The two cafes have failed to make a profit for the past two years, a result of declining footfalls and steep increases in rental levels, rates and insurance.
The news that the two Bewley's cafes are making seven-figure losses between them, despite turnover of Eu8m (£5.4m) a year, comes as Starbucks said it would like to open 29 outlets in Ireland, where the coffee bar market is estimated to be worth more than Eu500m.
The cafes form part of the Campbell Bewley Group, which also operates Campbell Catering, a coffee and tea blending business, and two retail coffee chains in America, Rebecca's and Java City. Campbell Bewley Group had a turnover of Eu135m in 2002 and recorded a pre-tax profit of Eu5.6m before exceptionals.
Observers in Dublin say a large part of the problem is the rent the company pays for the Grafton Street premises, estimates at Eu18,000 a week or Eu9.4m a year, which commercial property experts say is about twice as much as it can afford.
Jim Corbett managing director of Bewley's cafes, admitted closure of the cafes was a possibility, but said, the company wished to retain both sites, though this would only be realised by modern-day customer needs and achieving commercial viability: "Our plan is to implement a major repositioning of the two cafes and I fully expect that they will be still in operation in 12 months' time. We're going to completely enhance our offering and make it more appealing to customers."
