Bewley's is withdrawing from the café market at a time when many Irish and international chains are expanding.
Brands such as Insomnia and O'Brien's Sandwich Bars have grown rapidly and the world's largest coffee chain, Starbucks, is planning to establish a significant presence in the Republic next year.
Insomnia was founded in 1998, and currently operates 11 outlets and has plans to expand to 50 in the next few years.
It acquired the Bendini and Shaw chain in 2002, and its chief executive, Mr Harry O'Kelly, has signalled that its turnover will rise from €5 million to €10 million by the end of 2005.
The company's success has helped it to attract investment to support its ambitious expansion plans. Just recently it raised €4 million in funding from investors; within the industry, the company is valued as being worth about €10 million. There has been speculation that Starbucks could take over Insomnia as a means to quickly establish itself in this market.
O'Brien's was founded in 1988 by entrepreneur Mr Brody Sweeney and is estimated to have about 10 per cent of the Irish market. It has recently announced plans to enter the competitive London market.
According to its last accounts, the group recorded a profit of €876,385 in 2003 and had a turnover of €2.6 million. Other chains have also thrived, including Café Sol, Perk and West Coast Coffee, which are all profitable.
The sandwich and takeaway coffee sector is one of the fastest growing areas in the food and beverage market, and is estimated to be worth €250 million. Takeaway sandwiches account for about 14 per cent of all eating out. These businesses operate high-street shops as well as in-store locations.
The growth of these café chains certainly contributed to the demise of Bewley's. Consumers have readily embraced the wider variety and convenience they offer, with more people buying food and drink "to go".
In explaining the reasons why its doors will close on Dublin's Westmoreland Street and Grafton Street, Bewley's said that while it has invested in the businesses and had plans to enhance and improve them, the company could not be confident this would make them profitable.
Over the past few years, its cafés have been subsidised by Bewley's other businesses, and had incurred losses totalling €4 million. The firm just couldn't allow this to continue.