A flat-white coffee sits on a table at a Second Cup café in Toronto on Dec. 4, 2014.Chris Young/The Canadian Press
The Second Cup Ltd. is planning to close more underperforming cafés and will begin selling its coffee in grocery stores as the trend of more people working from home during the pandemic continues to affect coffee-shop sales.
The Mississauga-based company announced its plans Friday as it reported second-quarter results.
“With an increasing number of Canadians working from home, we know that the daily coffee experience is changing,” chief executive officer Steven Pelton said in a statement. “People want to be able to have a premium Second Cup coffee experience in their own kitchens, and we are going to make that easier for them, with the return of Second Cup coffee products to retail banners across Canada.”
The company also launched an e-commerce platform in April.
It is now in the midst of a “portfolio review” of its 244 cafés, some of which will be closed in the coming months. It will open 14 “non-traditional” locations in places such as hospitals, airports and train stations in the next year and a half. It also announced a new partnership Friday that will see it open three drive-through locations in Petro-Canada gas stations in Ontario, a relationship it hopes to expand next year.
Second Cup is in the process of opening cannabis dispensaries under its new brand, Hemisphere Cannabis Co. It is seeking a partner to produce its own line of cannabis products at those locations and is also planning to produce Second Cup-branded beverages containing cannabidiol (CBD) and tetrahydrocannabinol (THC).
“Our goal, pending future deregulation of CBD, is to make Second Cup the first national coffee chain to sell CBD beverages in our cafés,” Mr. Pelton said in the statement.
Last November, the parent company announced it would change its name this year to Aegis Brands Inc. to reflect a broader strategy that includes buying small- to medium-sized food-service businesses. (The name change is pending shareholder approval; the cafés will continue to operate under the Second Cup brand.) In December, it announced the acquisition of Ottawa-based Bridgehead Coffee. The company is seeking additional capital to fund further acquisitions, as well as to build its cannabis business and to open the “non-traditional” Second Cup locations.
Second Cup’s revenue fell 45.7 per cent in the second quarter to $3.5-million. Same-store sales – an important industry metric that tracks sales not affected by store openings or shutdowns – fell 52.6 per cent as its cafés were shut down because of the pandemic and its operations were reduced to selling products through takeout, delivery and drive-through channels. Its net loss widened to $1.9-million, or 8 cents a share, in the 13 weeks ended June 27, compared with a net loss of $782,000, or 4 cents a share, in the same period last year.
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.