Cafe chain Muffin Break is gearing up to open a string of new stores.
The franchise firm, operated by Foodco, will open a new store in Christchurch next month and other portfolio cafe chain, Jamaica Blue, will open a store in Auckland Transport's new Manukau bus exchange tomorrow.
Foodco New Zealand general manager Jon Hassall said planned new store openings reflected growth within its network, despite failures in the retail sector.
Hassall said some Muffin Break outlets had been impacted by the closure of recent fashion retailers.
"The market is fairly compromised at the moment with unfortunately Kiwi fashion businesses closing, and some international ones as well," Hassall said. "Malls are in a period of bringing in large-format [retailers] such as H&M and Zara but those take 12 to 24 months to come to fruition.
"Our new sites are typically coming into newly created malls, centres and developments. Right now we're not opening new Muffin Breaks or Jamaica Blue [stores] in existing centres because they are going through a period where they're losing a lot of fashion and trying to re-engineer their client mix to bring in a lot of leisure."
Hassall said most cafes and food outlets traded better located near and around well-known retailers.
"Muffin Break over-trades outside fashion locations," he said.
"We typically place our Muffin Breaks and our Jamaica Blue kiosks in fashion parts of centres so when one or two retailers close, and you'll know which ones those are, of course, that impacts us... and we see it on day one."
Increasing milk and butter prices, minimum wage hikes and higher rents were other challenges facing the sector, he said.
"Wages are going up, the cost of goods are going up, rents that the landlords set are typically going up and the consumer doesn't want those three or four things added to his or her coffee or bacon or egg roll or muffin so that obviously makes the profit model even more challenging," Hassall said.
"We typically don't drive people into a shopping centre but we do capture them when they're there so if a shopping centre is going through empty tenancies... then naturally we do feel that reduction."
New shopping developments under construction in Tauranga and Ormiston, among others, meant more opportunities for new store openings, he said.
Foodco is set to open another Jamaica Blue cafe in Christchurch in May.
Retailers' move from a regular sales model to every day low pricing had also had a significant impact on the number of people through its doors, Hassall said.
"What it means is we don't get those really busy Thursdays where everybody goes to Farmers or those really busy periods which The Warehouse used to have."
Tonya Carter, general manager of leasing and retail at Scentre Group, the company that operates Westfield malls, said shoppers wanted a variety of eating options.
"We look to provide an offer that isn't just food and beverage but a space that facilitates social connection," Carter said.
"Design plays a part in this as trends shift, however customers still expect a traditional offer. A range of food, cafe, and dining offers form part of the tenancy mix at our centres at present and will do into the future."
Food Co operates more than 400 Muffin Break and Jamaica Blues cafés throughout New Zealand, Australia, the UK and Asia. There are 40 Muffin Break stores and seven Jamaica Blue cafes in New Zealand.
Muffin Break opened its first store in downtown Auckland in 1994 and the first Jamaica Blue cafe opened in Riccarton, Christchurch, in 2005.