The man who saved Starbucks in South Africa

Despite the initial excitement surrounding the Starbucks South Africa launch in 2016, it wasn’t long before the business found itself floundering – prompting Adrian Maizey to take over the company with a R7 million deal.

Maizey’s experience in the business world spans decades and includes numerous leadership roles in prominent companies and firsthand experience working alongside some of the world’s most famous business people.

Born in Centurion, South Africa, Maizey attended Pretoria Boys High School, where he matriculated in 1991.

Growing up, he had a big interest in sports, and he only attended the University of Pretoria for one year when he decided that he wanted to pursue his passion for tennis in the US.

He applied to several American colleges and received a few offers, including one from the University of Nebraska, where he studied accounting.

“It was life-changing,” he told BRICS TV. “As a youngster, all of a sudden, I was now out of the house on my own in the country where I didn’t know a single person.”

“I started from scratch. I showed up with one suitcase, and there was no family relationship or anything of the kind.”

“But it was the time of my life. It was difficult to adjust initially and then it led me to a whole different career.”

In 1996, he graduated and went on to work at Deloitte for a few years before pursuing an MBA at Harvard Business School.

“I don’t know how I got in,” he jokingly told BRICS. “If I look at my letters of application to Harvard Business School, it was always about trying to be the CEO of a company.”

“It was ultimately about finding a place on my own path and becoming an entrepreneur.”

Once he finished his MBA, he returned to Deloitte, where he eventually became the CFO of a hedge fund in New York City, trading energy derivatives.

“And that actually blew up after being there for six months,” Maizey said. They had to wind down that business, “but that taught me a lot about what not to do.”

Then, he went on to work as a CFO for Eddie Lampert, an American billionaire businessman and former chief executive of ESL Investments.

He described Lampert as an incredibly hard-working and very difficult boss who taught him more than anything else in his life.

“He was demanding, but you need that to excel; otherwise, you’re going to be mediocre,” Maizey told BRICS.

Once Lampert moved to Miami, Maizey formed his own company, Rand Capital, in 2012. The name had the dual-purpose of recognising South Africa’s currency, as well as The Fountainhead author Ayn Rand, whose philosophy he admired.

He then moved to the West Coast and worked for a company called Leonard Green & Partners, a big private equity firm known for its retail investments in well-known brands like Whole Foods, Shake Shack and J Crew.

He left that company and joined two other South Africans who ran an investment firm in South Africa, which brought him back to the country in 2016.

They had a portfolio of companies, including Taste Holdings, which originally brought Starbucks to South Africa.

However, Taste struggled to keep the business profitable, and – between licencing fees, recapitalisation costs and loans – they spent an estimated amount of over R1.4 billion trying to keep Starbucks afloat, according to Bizcommunity.

Finally, Taste announced its plans to exit its food business entirely and focus on its luxury segment instead.

This meant that all the Taste food brands, Starbucks, Domino’s Pizza, Maxi’s and The Fish & Chips Co, had to go.

While brand stablemate Domino’s Pizza faltered in the process, Maizey fought hard to save Starbucks.

Rand Capital Coffee, a subsidiary of Rand Capital, swooped on the Starbucks licence towards the end of 2019.

“I personally got involved and put personal money in and underwrote the rights offering in January of 2020,” Maizey said.

He was able to acquire Starbucks South Africa’s franchising rights and 13 locations for a purchase price of only R7 million, but they had to pick up all of Taste’s liabilities as well, which “was quite a significant amount”.

“I then had skin in the game and became very acutely focused on how they were succeeding as a business and whether they were succeeding because if they didn’t, I was going to lose my personal money.”

Maizey explained to Sandton Times that when he looked at Starbucks South Africa, it was clear that it had not been managed properly, and there was an opportunity to improve the business’s execution.

“Really, the vision was about coming back to South Africa. About building a brand that has the ethos that is community focused, that’s people focused.”

He explained that in 2019, before taking over as CEO, Starbucks was profitable at the store level, but high overhead costs, multiple governance layers and unnecessary expenses were leading to losses and dragging the business down.

“We took that out right in the beginning,” he said to BRICS, adding that once they did that, Starbucks was profitable right off the bat.

As the CEO of Starbucks South Africa, he wanted to shift the business in the right direction, which meant understanding the country’s unique needs.

South Africa is much different from Western Europe and the US, which means that the same business model will not work here.

He thought the business was missing this South African touch, so he convinced Starbucks to let him bring locally manufactured furniture and art into the new locations.

Although it would have been easier to stick to the classic Starbucks design, this was more economical and “authentic”.

“It’s been a really good experience. It helps with our business model but it also helps with us being authentic in saying we are local.”

He also changed the trajectory of how Starbucks was expanding. Instead of focusing as much on opening mall stores, he wanted to focus on opening smaller neighbourhood locations and grab-and-go shops.

“We need to convert this novelty to a necessity, and we do that by being within reach of the community,” he told Sandton Times.

According to Maizey, two major things set Starbucks apart from other coffee shops. The first is the variety, with over 87,000 possible drink combinations.

The second thing, he said, is the ethos of the business and the people. “We’re a people business that serves coffee, not a coffee business.”