Joe & the Juice bids for growth despite the Covid squeeze | Hospitality industry
Founded by a Danish karate champion, the smoothie chain Joe & the Juice has blitzed its way on to British high streets, where its pastel-pink outlets and drinks with names such as Sex Me Up have cut a distinctive dash.
Having grown from one juice bar in Copenhagen in 2002 to 300 outlets around the world, the chain is planning to double in size in the next few years, and is rumoured to be plotting a stock market listing.
Top of its list is the UK, where it plans to add up to 20 outlets next year on top of the 54 already open, making Britain the biggest market for Joe & the Juice worldwide.
Despite its rapid growth, it remains a fraction of the size of rivals such as Pret a Manger, which has more than 300 outlets, despite closing 30 during the pandemic; Starbucks, which has more than 1,000; and Costa, with more than 2,000.
The pandemic may have crushed some cafe chains, but Joe & the Juice only permanently closed 10 outlets and has been able to secure many new sites as rents have fallen and rivals downscaled.
However, chief executive Thomas Nørøxe says the group has been forced to dream up a menu of creative ideas to attract and retain staff in the battle for workers that has followed Brexit and the pandemic.
“We need 15 new people every week – and we are not really getting them now,” he says. Five of its London outlets are being temporarily closed because of staff shortages. Expansion in the north of England is also being held back by the speed at which young people can be hired and trained up.
Nørøxe says the company is offering perks including international travel, yoga nights, and “showoff” competitions where staff can win prizes for cocktail-waiter-style tricks with juicers and ice cubes. Also on the cards for the UK is a clearer career path towards higher earnings, with business training and regular bonuses for hitting company targets.
“Probably in the past we were reliant on a lot of Europeans working hard and having fun times in London. Now everything is shifting,” Nørøxe says.
Joe & the Juice’s experience in the Nordic countries, where pay has long been higher than the UK, has helped equip it for the tougher recruitment market emerging in the hospitality industry here.
The business has also become an accredited employer under a government visa scheme which will enable it to bring in 20 bar managers to help train British staff to fuel its expansion. The plan bolsters an existing programme under which trainees can opt to get experience at juice bars around the world, with discounted accommodation in “Joe houses” rented out by the company.
Even if young people can be found to fuel the business, does the UK really need more coffee shops – even those with freshly made juices with snappy names, porridge and toasted sandwiches? With a Sex Me up apple, passion fruit and ginger drink costing £5.90, it isn’t cheap and cheerful either.
Founder Kaspar Basse had big ambitions for his brand, taking inspiration from Starbucks. Those dreams have been supercharged with backing from private equity groups Valedo Partners and General Atlantic in 2013 and 2016. However,
city centre cafes reliant on commuter traffic have taken a battering through the pandemic, and the apparently longer-term shift to working from home, at least part-time, is likely to make it harder for many such places to survive.
Latest accounts at Companies House show pre-tax losses at the UK business widened to £3.7m in 2019 from £1.2m a year before, despite a 27% rise in sales to almost £24m.
Nørøxe says Joe & the Juice was partly protected in the pandemic by its focus on affluent neighbourhoods in the UK, such as Richmond, Chiswick and Chelsea in London. Those outlets continue to enjoy trade well ahead of pre-pandemic levels – up by a fifth on 2019 – as non-commuters pop in for a break from the home office.
Nørøxe says that, at least before the Omicron variant appeared, sales were back to 2019 levels in London commuter centres such as Cannon Street and Canary Wharf. Since July, the UK business has rebounded, exceeding 2019 sales levels for the year to date by September.
“Cities are coming back in a different way to the old days,” he says.
Part of that change will be digital services that link your local coffee shop to your phone. Like some other venues, Joe & the Juice launched an app which enables customers to make an order from home so it is ready when they arrive, while its delivery service now accounts for 20% of UK sales, having only started just before the pandemic. A subscription service is being tested and is likely to be on the way next year.
An IPO had been on the cards before Covid; showing the group has a winning formula will be essential in achieving a public listing.
Nørøxe admits there is heavy competition – but also optimism – from several of the chain’s rivals about the future for cafes in the post-Covid world. “The fight for new sites is definitely here,” he says.