Tourists stimulate Kazan coffee market
Federal coffee chain shops are conquering Kazan seizing each other’s strategic locations
As Realnoe Vremya found out, after lifting strict coronavirus restrictions, Kazan drew the attention of federal coffee businesspeople. The chain of Skuratov Coffee, which saved five Kazan shops offering specialty coffee during the lockdown, has recently opened another shop. It has a bit outstripped other market players in terms of coverage and has found a spot in the centre of Kazan. However, another famous federal chain will be its rivals (the name isn’t revealed yet), which has rented areas on Bauman Street at exorbitant rates. Food court experts say that the high profitability of the business multiplied by growing tourist traffic explains the upsurge of coffee mania.
Siberians bet on Kazan, not Moscow
Skuratov Coffee coffee chain from Omsk founded by Siberian entrepreneur Viktor Skuratov has notably expanded its presence in Kazan, and the lockdown seemed just to have helped it.
“The chain opened the sixth coffee shop in a business location, on Peterburgskaya Street, on 5 June,” the company told Realnoe Vremya. “The difference of the new coffee store is that it will be the biggest in Kazan.”
The sixth coffee bar is situated on the border of the pedestrian street and the business part of Peterburgskaya Street. “On the one hand, tourists and citizens constantly walk here. On the other hand, the business environment with IT companies, co-working and offices is based here,” the company explained.
“Guests with a laptop are the favourite clients of their coffee shops, they can stay in the cafe for hours,” one of the co-founders of Neft coffee chain from Tatarstan explained. “We call them laptopists who work for 3-4 hours with a coffee cup. Our cafes and restaurants don’t like them much because they need a table turnover. While in coffee bars, on the contrary, they create a comfortable atmosphere.”
It is interesting that in the number of shops that opened in the city, Kazan is ahead of not only Nizhny Novgorod and Samara (two in each city) but also multi-million Moscow. As the company said, only four coffee shops of this brand operate in the capital. The chain in general includes seven Russian cities with 33 coffee bars.
Almost half of them are in the homeland, of course. “There are 13 in Omsk,” the company clarified. So Kazan became a reference point in the Omsk businessman’s regional expansion, which is characteristic of regional companies’ strategies. In 2020, the company’s revenue rose to 156,3 million rubles and net profit did to 71,2 million rubles, according to SPARK-Interfax.
The chain spread in Kazan in almost 3 years, but the last year was the toughest for the food court. The first store in our city opened late in 2017. After that, new locations opened once within six months. However, the company deliberately chose sites in the historical centre of Kazan. So the first coffee shop opened on Bauman Street, the second one appeared 200-300 metres further.
According to market players, the Omsk chain notably raised rent rates in Kazan’s centre where Early Bird, BeanHearts, Surf Coffee were located. They literally drove restaurants out of Pushkin Street.
Coffee street in dormitories
With the coming of competitive coffee businesspeople with high traffic, only Dekabristov Street can be considered an exception. So one of the first cafes of Neft coffee chain from Tatarstan is here.
“We were the first to open a cafe on Dekabristov and Universitetskaya,” says one of its co-founders. “We were said what food could come here to drink a cup of coffee for 150 rubles when it cost 40 rubles in vending machines. It turned out people come and drink it. And believe me, when we opened on Dekabristov, there was nothing. And now it is a good coffee street: there are both Skuratov Coffee and us. We aren’t afraid, might people choose. It used to be a dying street with either Pyatorochka or Magnit grocery stores. And we made a coffee street though we opened in old houses of the dormitory. However, traffic is very different: tourists and techies walk in the city centre, while people above 35 years do in the residential area.”
He says that some people love coffee for 150-200 rubles for a cup, and their number is growing if the quality is maintained. “Our Kazan chain has two fully-fledged coffee shops and three takeaway points. But we have a coffee roasting machine here, while they have it in Omsk and Moscow. We roast 21 tonnes and don’t buy cheap grains because we work with the client’s taste,” he said. “We familiarise people with a new taste, freshly roasted coffee. It is preferable to consume freshly roasted coffee in the next 10-40 days, then coffee starts to lose its taste. Roasted coffee is often brought from Italy or Germany, this is why not everybody’s coffee is delicious. Coffee is top-class only it has been roasted recently — it is specialty. Speciality is freshly roasted Arabica with the smallest number of deficiencies.”
3% of revenue was demanded additionally to rent
Rent terms for coffee shops are different. “There was a place where I wanted to open, they asked for 300,000 a month. I am not ready and I will never be. I also wanted to open on Peterburgskaya,” the co-founder of the Tatarstan chain shop told Realnoe Vremya. “It is a place with high traffic of businesspeople. This area is very expensive. Some people sensible evaluate the place, while some insensible people demand 3% of revenue together with rent. Of course, I turned my back and kept searching.” He recalled that the food court was permitted to operate only for takeaway. Many who weren’t ready to work for takeaway lost the business, though people anyway drank coffee.
“Yes, there was a big fall. But nowadays we have survived. I saved the staff by paying the average salary a year, not the minimum wage. If in May we broke even, we started to earn in June.”
Market players admit that the Omsk chain is outstripping the rest in traffic in Kazan. Rumour has it that the company is allegedly preparing to file for IPO to attract investments. But it is a question if this is true.
Earlier this year, Shkurenko Trading House of Viktor Shkurenko who was one of the co-owners of the chain said in an interview that those who had several business areas managed to overcome the pandemic without a problem:
“We are very lucky because our sector — both wholesale and retail food — almost didn’t suffer. We had quite conservative plans for 2020, we had to change nothing. Firstly, because the Russian economy hadn’t been growing for 6 years, there were many problems besides the pandemic.
I don’t imagine how small businesses are surviving. We are almost entering those niches in which small businesses should operate. We have to push them out to grow. When the economy grows, there is room for everybody. And when it stands still, businesses eat each other. It is the first trend. Consumption is the second trend. The population is becoming poorer, 90% of consumers are looking for a cheap good on the shelf. As a result, we produced a cheaper product with a lower quality. Entrepreneurs follow consumer demand, we have offered the market what they can buy. I tried to do differently, opened Peasant’s Courtyard with natural products — nobody needs it (Editor’s note: it existed for about three years with pauses but didn’t withstand the competition with supermarkets).”
Among the companies he is involved in, Shkurenko confirmed that Skuratov coffee bars and a chain store of household appliances received governmental support measures. This became possible because “the companies were legally strong”.
Incognito from Moscow on Bauman Street
Shokoladnitsa federal chain that increased the number of cafes to five is a rival of the Omsk businesspeople.
Also, the chain is primarily present in Kazan’s shopping malls. The co-owner Neft indicates that it is more profitable to open places in the summertime along the streets with stable pedestrian traffic because people don’t want to go to shopping malls to drink coffee when it is hot outside.
At first, Cofix company slowed down its development pace in its coffee shops in Kazan. By late 2019, the chain planned to have 25 points in the city, however, in early 2020, the brand’s establishments in Kazan closed. In March 2021, it became known that the chain was planning to return to our city and open seven shops.
Also, a large federal coffee chain is entering Kazan, said Realnoe Vremya’s source who is familiar with the terms the player is coming to the Tatarstan market on. According to him, the chain rented an area in the centre of Bauman Street at exorbitant rates.
“Like Skuratov Coffee, the Moscow chain buys, roasts and sells coffee,” he said but didn’t reveal the name of the company.
However, it will be soon announced because the opening is scheduled for early summer.
“Rent rates are very important for cafes and restaurants, but a coffee business buying, roasting and selling coffee can accept the highest rates,” notes Director General of ReAgency Yury Chikirov. “The rates on Peterburgskaya is from 1,000-1,200 rubles per square metre on the first floor. It services only pedestrians who are provided by business centres and IT Park. Now people like to have negotiations in coffee shops, this is why it is important to occupy strategic positions, this is what Skuratov did.”