Second Cup and National Access Cannabis: Responses for W5
Published Friday, October 19, 2018 11:57AM EDT
Read Second Cup’s responses to W5 about their partnership with National Access Cannabis:
Why has Second Cup decided to partner with NAC?
The legalization of cannabis in Canada represents a business opportunity for brands and companies across a number of industries. So when we were approached by National Access Cannabis, we felt there was an opportunity to be explored, and in April, we announced a strategic alliance between our two companies. This strategic alliance is, we believe, an opportunity for Second Cup to leverage its valuable real estate assets to drive value for our shareholders and franchisees.
How many stores will SC transform into Meta stores? (last estimate we heard is 50, from NAC)
Today there are 3 Second Cup locations that have been approved for a site development permit in the province of Alberta. The conversion of any Second Cup café to an NAC-branded recreational cannabis dispensary will be conditional on obtaining a retail license from provincial regulators and the approval of Second Cup as well as the applicable franchisee and landlord.
How will SC decide which locations will become Meta stores?
Pending licenses being granted, franchisees in select locations may be presented with an opportunity to convert their location - and then they have a few options. They may choose to accept a buy out of their franchise agreement (in which case the store will be converted to a National Access Cannabis location) or make the conversion and potentially run the store together with NAC. They can also choose to decline the opportunity and remain a Second Cup location, with no changes.
Does Second Cup have any long-term plans to create cannabis-lounge type of venues, where patrons can consume legal cannabis products?
It’s probably unwise to speculate on business opportunities or concepts that are not yet legal in Canada. Our strategic alliance is focused on converting select Second Cup locations into NAC-branded retail stores - these will not, it should be noted, be Second Cup-branded locations. And our overarching focus as a business is the continued growth of Second Cup Coffee Co.
Second Cup sales have been soft in the past couple of years - if these new converted stores are a success, would SC consider further divesting of coffee cafes and putting more emphasis on Meta stores? / Would Second Cup ever consider getting out of the coffee/cafe business entirely if it made good business sense?
Second Cup is on a journey of transformation. In the past three years, we have undertaken a complete reinvention of our business, our brand and our café experience as part of our mission to provide the most premium and innovative coffee experience in the country. And we remain focused on this mission - and on growing our Second Cup brand and sales through continued product innovation and the expansion of our network across Canada.