A transformation could be in the works for Second Cup Ltd. with the hiring of new CEO Alix Box, who brings a marketing and retail pedigree to the coffee chain from executive roles at Holt Renfrew and Starbucks.
Her appointment Monday comes at an opportune time for the veteran coffee seller, which has remained a fixture on Canada’s main streets and retail malls but has been dwarfed over the years by the incursion of Starbucks in Canada — a successful rollout in which Ms. Box had a key role during her decade with the Seattle-based food and beverage giant in Canada, where she worked as vice-president of operations until 2007.
The industry was anticipating a change at Second Cup after an ownership shakeup at the Canadian coffee chain last month, when former owner and CEO Michael Bregman returned as chairman and his Tailwind Capital bought a 5% stake in the chain.
The shuffle just before Christmas also saw the installation of former CEO Alton McEwen to the board.
“Second Cup has an iconic Canadian history and I believe together we can build an even brighter future,” Ms. Box said in a statement announcing her upcoming role. She will begin work at the company in three weeks’ time.
“I am eager to work with our loyal franchise partners to improve cafe performance while providing Canadian coffee lovers with an upgraded, modernized vision for the future.” She was not available for further comment.
Ms. Box has worked for the past six years as senior vice-president of retail and senior vice-president of sales and marketing at luxury department store Holt Renfrew.
She replaces Stacey Mowbray, CEO of Second Cup since 2008.
“In the history of the company, Michael and Alton have really been the only two who have been able to get value out of that business and who understand it the most intimately,” said Doug Fisher, president of food service consulting firm FHG International.
“Stacey has been maintaining the business, but I don’t know that she really had proper direction and board support.”
The coffee chain’s performance has lagged its peers in the industry in recent years, and sales at stores open for more than a year slid 3.7% in the third quarter ended Sept. 28, and 3.1% for the first three quarters of the fiscal year. The company, which has 351 locations, closed 12 poorly performing kiosks in the third quarter and posted profit of 9¢ per share in the quarter, or $918-million, compared with 8¢, ($746-million) in the same period a year ago.
But Second Cup is still well-positioned in the market because its store base remains intact and its brand remains fairly solid, if lacking somewhat in innovation, Mr. Fisher said.
“They still have a loyal customer base, but the business is just not what it was. I think this will bring some creativity back into the business. I think there is room to grow in the upper end of the market.”
While McDonald’s and Tim Hortons are duking it out on the lower end of the coffee market, Mr. Fisher said he sees room for Second Cup to better compete against Starbucks and independent espresso bars.
Founded in 1975, Mr. Bregman first bought Second Cup for $12-million in 1988 and took it public to spearhead an expansion in 1993. He sold it to Cara Operations Ltd. in 2002, which sold it to Dinecorp Hospitality in 2006; subsequently it was renamed Second Cup Ltd.
Source: Financial Post