Financial pressures left Bewley's with few options but to close its loss-making cafés, writes Siobhán Creaton, Finance Correspondent
Bewley’s cafés have been a huge strain for the Bewley group over the past eight years. Announcing the closure of the famous cafés on Dublin’s Westmoreland Street and Grafton Street, the company said it had reached the point where its other profit-making business as suppliers of tea and coffee to major Irish and international customers could not longer subsidise their existence.
The Campbell Bewley group has battled for almost eight years to keep the cafés alive and vibrant. In 1996 it invested €12 million in modernising its facilities and giving the cafés a general facelift.
Despite this substantial cash injection, however, it still couldn’t turn a profit. Instead over that period, the cafés lost €4 million. It was an expensive and futile rescue mission.
In its statement yesterday, Bewley’s said it was clear that the costs of redeveloping or redesigning its premises would never be recovered.
Bewley’s has considered entering a partnership with a successful restaurant or licensed trade operator where it could maintain a presence, but realises this is unlikely to materialise.
The difficulties it faced in trying to squeeze profits from selling food on a large premises on Grafton Street are easy to judge when a recent survey proclaimed it to be the world’s fifth most expensive street on which to run a shop.
The Grafton Street building is also listed and Bewley’s would have been likely to encounter planning difficulties if it sought to make structural changes. Owned by Treasury Holdings, it will almost certainly be taken over by a fashion outlet, with retailers such as Zara being mentioned as likely tenants there.
It intends to redevelop the Westmoreland Street premises in the coming years to realise its commercial potential. This site is also likely to be taken up by a major retailer. Bewley's initiated a review of the cafés in February after announcing a decision to close its bakery operations at Northern Cross on the Malahide
Road.
Falling prices, increased competition from imported products and a loss of sales all contributed to its trading difficulties.
Bewley’s became part of the Campbell Bewley group in 1986 when it was bought by the Campbell family. Today a significant amount of its turnover comes from sales of its teas and coffees in the US. Several hotels bearing the Bewley’s name are not owned by the company.