Economic winds blow cold for Newcastle Coffee Club franchisee

McLean recently put both his Coffee Club business and his freehold on the site, on the ground floor of the Stella apartment building on Hannell Street in Newcastle West, on the market.

McLean and his wife Fiona opened the cafe in late November 2021 with immediate success, but have been forced to make major cutbacks in recent months due to continued cost pressures.

"When we opened, we were flying for our first few months," McLean said. "The concept was good. We were smashing it."

At the time of the opening, he was quoted as saying, "This is the place, down here. What's happening here over the next five years will be amazing."

But things have not panned out as planned.

Office workers did not return to the city full-time - he particularly notes the state office building on Stewart Avenue, not more than 100 metres from his front door, where McLean says staffers only come in to the office one or two days a week.

And he notes the 18-month delay on construction of the Bowline apartment building adjacent to his cafe. The16-storey building with 118 apartments is now set for completion in the second quarter of 2025.

"This [Bowline] development next door, when it comes out of the ground, there will be 200 people on site, and we'll get 30 of them, they'll walk in here and we'll be fine," McLean said.

McLean's Coffee Club has gone from 25 staff to two permanent and seven casuals. Hours went from 6.30am to late at night in a novel combination of coffee by day and burgers and beer at night, to 6.30am to 2.30pm now.

The burger business boomed at first, helped by constant specials driving business through the Uber food platform. But the cost of commissions and packaging, plus the competitive algorithm on Uber which pushes highly discounted offers to the top of its search list, meant McLean wasn't making much profit despite the volume he was doing.

"We thought we had the timing when we first came here," McLean said.

McLean said putting the business and the property on the market would give them "choices" about their next business decision.

McLean said opening the business before the area's developments were firmly established turned out to be the biggest risk.

"It's a shame, because I see this part of town, once it comes through, I reckon it will be pretty cool," he said.

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