When the crisis hit, The Coffee Club (TCC) New Zealand business came to a complete halt. But with a tremendous effort, unmatched entrepreneurial spirit and amazing team work, the team of The Coffee Club New Zealand around Brad Jacobs kept the business going – and made it come out stronger than it was before.
In mid February, it was “business-as-usual” for The Coffee Club New Zealand’s 66 cafés. But this was about to change rapidly. At the end of February, New Zealand reported its 1st case of COVID-19. The news caused panic buying among large parts of the population. People went out to stock up on groceries, packaged food, toilet paper and other daily necessities. TCC sales collapsed overnight and saw negative growth of -20% for the week that followed. The team worked hard to claw back sales to around -5% comp growth for the following 3 weeks when the situation seemed to stabilize, but with the number of cases rising, a lockdown was unavoidable, and soon enough the government announced closure of dine-in, allowing only take-away and delivery.
At this point, none of the 66 cafés had online delivery options available, so business was confined to take-away only. And just a week later, the worst case imaginable happened: The NZ Government announced a 100% closure of all trade activities for 5 weeks! Only supermarkets were allowed to trade under very strict regulations. Sales went down to zero.
After 5 weeks, businesses were allowed to re-open, but only under strictest regulations: Restaurants were opened for delivery and take-away only, customers were not allowed entry to the restaurants. Orders had to be placed online, and with no cash allowed, the only channel for customers to pay were e-payments made through credit cards or e-wallets.
This presented a huge challenge for the TCC team in New Zealand, as none of the infrastructure existed within the TCC-NZ system. However, with a tremendous push, the team managed to sign-up the majority of its cafés to UberEats. But not only that – the team also went on to build a complete online ordering system from scratch within only a couple of days – including a “track & trace system for customers” to prove to landlords and government authorities that it was safe for The Coffee Club to trade under the restrictions. All of this was done by TCC’s very lean IT team of only 2 people!
And sales started to recover: With -83% comp sales in the Week 1 after re-opening, improving to -77% and -45% in the weeks to follow. After dine-in re-opened with reduced capacity (around 50% of seats had to be kept empty), sales started to further improve to -10% and -3% in the following two weeks.
Finally, seating restrictions were lifted, and at this point, sales jumped to +10% and +13% comp sales in the first 2 weeks of trading, significantly above pre-crisis levels.
But how was this possible?
First of all, the Marketing team had used the time during the shutdown to prepare for the re-opening: With zero budget (!), the team created a TV ad, filmed at home in one of the team member’s own kitchen. The ad included the new TCC branding (new logo, new brand identity) and was ready to be broadcasted at opening day. This way, TCC brand was one of the first brands to start TV commercials again, which gave the brand significant exposure and won the heart of many customers.
Brad Jacobs, TCC New Zealand’s Director explains: “These TV commercials were put together during lock down, filmed in our home dining room with our own camera equipment, voiced over by my business partner Andy, edited remotely by our TCC marketing team, and all with zero budget. We had them ready to go so they could be immediately on TV from the day we could had confirmation from government that we could reopen. Once the cafes actually started trading again and we could film in store, we also put together another little clip as a bit of fun and it was used on social media (not on TV).”
Here the links to the videos:
But the real stroke of genius was the team’s decision on their menu offering after reopening: Going complete against the market, the team decided to maintain the full offering for customers and even launch some new menu items – contrary to the decision made by most of its competitors and also major fast-food players who cut down their offering, restricted menus as well as shortened opening hours.
By maintaining maximum service levels, the team made an important trade-off: putting customers first, against the risk of potentially having some waste in the system. Moreover, the new menu launch gave the team reasons to communicate positive messages and exciting news to customers, while all competitors focused on the “negative” aspects of informing people about their safety and social distancing compliance etc. The TCC team had realized that customers were longing for good news, and adjusted their plans accordingly.
The results showed that the decision was absolutely the right one: With the push on online ordering and delivery, with the zero-budget TV ads and the decision to maintain the full menu, TCC was way ahead of competition and came out of the crisis much stronger than it went in.