The Fall of Caffè Nero

How a pandemic killed the company

The Fall of Caffè Nero

24/03/2020

As Covid-19 forces shops to lock their doors for the foreseeable future it doesn't take a captain of hindsight to see where coffee shop chains have lost not only money, but a fat frothy dollop of loyalty and support.

Knowing they are non-essential many public facing industries closed doors early in fear of spreading the infection. Although no one expects big business to fully embrace a lock down/ shut down in any measure, let us cast our minds back only one week when most coffee shops are running in a mostly undamaged safety-bubble. Was anyone predicting the shock of a pandemic of this scale... well yes actually many were, watching the drama unfold in Wuhan, not only did many expect it, many companies were preparing for it.

Withdrawing money from the safes and reserve tills of all shops across the country, big coffee daddy Nero was getting ready for the mocha to hit the fan.

Shortly before March 2020 Caffè Nero was the most profitable coffee shop chain in the UK, now it is on the verge of collapse, forced to accept government funding to support staff pay and protect jobs. Let's be realistic if you are running a large company of any magnitude it is good practise to have on hand a large sum of money, this is called a rainy day fund and for most people this is common sense. Even toothless Mary from the trailer park has spare singles in a box under the sofa.

The CEO Gerry Ford will tell you that re-investment was key, all money was given back to staff, back the shops, and back to the business. This technique is not uncommon and, if true, is fair play, however Ford only paid a flat-white foam level higher than minimum wage. Shops haven't had a face-lift in years, Nero's interiors are the skid-mark of Italian 'fakery' down the porcelain of the British high street, if Covid-19 is the loo-brush then have at it.

So now with no reserve money and failing shops Nero's face the choice of either selling shops, selling the smaller bands under their umbrella (Coffee#1 and Harris and Hoole) or seeing it through with debt and losses to the other side of this seemingly never ending chaos.

Maybe after so many complaints from public and staff alike on the 20th March they would close the doors to limit the spread of the virus, protecting customers and staff. But no. Employees could not take furlough and risked serving vulnerable members of the public despite the cries of the masses to shut. Shut the doors and let your staff stay safe at home. At home with less risk to themselves and potentially the vulnerable people around them.

Caffè Nero is the heart of the community and must beat on. Well maybe it is more like the gangrene arm throwing hot coffee in the faces of dementia patients whom shouldn't be out in the first place for a quick last minute cash in, knowing when it is time to sever the arm can save the body.

By not being honest with teams of people that represent your brand you make a mockery of their misplaced initial faith in leadership. You know you have acted too slow and in the wrong way, when the embarrassment doesn't stem from the online trolls, but instead your own staff.

When is a good time reflect on the mismanagement of the crisis.

When the internal social platform created to communicate information between teams and leadership was inundated with finger pointing comments blaming the leadership for making them ill?

When your own pages of explanation on why you are still serving are being sent out to staff faster than .Gov website can change their own guidelines on avoiding the spread?

When you then need to take down your own explanations on why you remained open for so long, because now the decision has been made for you by the government leaving you looking like the fool?

Or is it when you read that people have taken to the internet to note the fact that you broke contractual law by lower staff hours to zero to cut costs regardless of the stated minimum guaranteed?

Let us see what the future holds for Caffè Nero, after all this, would it even be missed?

IMO- Max T

industry
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