Bewley’s posts profit despite €1.5m loss on Grafton St café
Company blames ‘excessive’ Celtic Tiger era rent for difficulties at city centre site
Bewley’s cafe on Grafton Street in Dublin. Photograph: Brenda Fitzsimons / THE IRISH TIMES
Irish coffee group Bewley’s returned to profit last year despite recording a loss of about €1.5 million at its flagship cafe in Grafton Street, Dublin.
Latest accounts for Bewley’s Ltd show it made a profit of €389,000 last year compared with a loss of €18.6 million in 2017, which was largely due to Brexit-related expenses and costs associated with the lease of its Grafton Street cafe.
Group turnover fell by 2 per cent to €147.6 million while its cost of sales declined to €74.2 million from €76.6 million previously. Other operating costs were flat at €71.9 million.
The company, which has operations in Ireland, the United States and Britain, posted an operating profit of €1.4 million, down from €2.2 million a year earlier.
Speaking to The Irish Times, chief executive John Cahill said the losses at its Grafton Street cafe were due to its near €1.5 million rent, which he described as “excessive” and a legacy from the Celtic Tiger boom.
Bewley’s fought a long-running legal battle with its landlord, Johnny Ronan’s Ickendel Ltd, post the crash in 2008 to get the rent reduced to a market rate but was ultimately unsuccessful. Its lease is due for renewal in 2022.
“Our core mission here is to make this cafe financially viable against the benchmark of a fair, open market rent. And what we’re paying at the moment is a two or three times multiple of what it should be,” he said.
Mr Cahill said the cafe had also been impacted by the VAT increase from 9 to 13.5 per cent, and football on Grafton “easing off a little back due in part to the effect of the [cross-city] Luas”.
Some 600,000 customers passed through the Bewley’s cafe on Grafton Street in 2018, its first full year of trading following a major refurbishment of the listed property.
Mr Cahill said coffee volumes rose last year by 3 to 4 per cent while its gross margin – a key metric for the business – was up 0.5 per cent.
In terms of sustainability, Mr Cahill said Bewley’s was working on a new “compostible, recyclable packaging foil, which is the next challenging area for everybody to look at”.
Bewley’s increased its stock levels in 2018 by just under €1 million, which reflected some stockpiling of products in the UK due to Brexit.
Bewley’s employed 1,148 staff on average during the year, up from 1,064 in 2017. Its payroll costs increased by 5 per cent to €40.8 million while directors’ remuneration rose by one-third to €448,000.