Coffeeheaven froths at the mouth
Recently bitten by unfavorable currency exchanges, Central European 'specialty coffee' and sandwich chain Coffeeheaven is looking to delist from the London Stock Exchange, while considering floats in both Warsaw, the city that houses its headquarters, and Prague.
However, Richard Worthington, the firm's chairman, slams recent claims made in the press that the company, now listed on Warsaw's over-the-counter exchange (CeTO), has any immediate plans for an IPO on the Warsaw bourse.
"What I can say for now is that clearly it makes sense to list where our customers are, and where investors can see our business," he states, adding that being listed where the action is would also bolster the company's profile with potential landlords.
And a lack of clout with pushy Warsaw landlords, as well as unpredictable exchange rates, is apparently Coffeeheaven's bad fairy. Despite sales that continue to rise at spectacular rates (57 percent over the last six months alone), the three-year-old company's top-line growth is not yet translating into profits.
According to Michael Ovadenko, the firm's co-founder and managing director, the trouble is that developers expecting as short as eight- to 10-year returns on investments due to the perceived increased risk in Poland are in fact pushing the risk onto their tenants in a bid to minimize their own exposure.
"Shopping mall operators also have an unrealistic notion of the kind of profits generated by a specialty coffee and sandwich bar," he explains. "When you're selling quality coffee and fresh food, the costs are going to be higher."
Jarek Lipiński, director of the retail department at commercial estate agency Colliers International, agrees that some mall operators' rates can be sky-high, saying, "Złote Tarasy, for example, has certainly earned itself a bad reputation." However, he refutes the notion that the capital's landlords in general are unrealistic in their demands.
Though some malls tend to open negotiations with tall orders, they can be brought down, Lipiński maintains, adding that factors such as how long a company has been on the market and how much weight its brand name carries can all influence the prices asked.
"If Starbucks, for example, decided to move in, they'd probably get lower rents," he says.
Coffeeheaven, meanwhile, is already looking further afield, having opened two outlets in Prague.
Compared to Warsaw, Ovadenko believes the Czech capital is better planned and has a better cared for city center, which generates a robust high-street shopping culture as well as flocks of tourists - fertile ground for Coffeeheaven. But the company has further Central European ambitions too.
"If we can't get adequate returns on our investments in this country," says Worthington, "then we'll be moving swiftly on."
However, despite its threats and frustrations, Coffeeheaven continues to push on with its promise to open 50 outlets by the end of 2006, an ambition it has held since it first entered the market in 2001. With 22 outlets open in this country already, 12 of which are in Warsaw, and another eight thought to be in the bag, the company is well on its way to achieving this goal. And though still an infant, the chain is already the market leader.
Last December, Coffeeheaven became the first chain of coffee houses to boast wireless broadband Internet access, or WiFi, hotspots when it teamed up with Hewlett-Packard, the largest IT firm in the country. And although few believe that the venture will become commercially viable any time soon, it has certainly helped to generate hype in the media and bring Coffeeheaven to the attention of the business community.
However, Richard Worthington, the firm's chairman, slams recent claims made in the press that the company, now listed on Warsaw's over-the-counter exchange (CeTO), has any immediate plans for an IPO on the Warsaw bourse.
"What I can say for now is that clearly it makes sense to list where our customers are, and where investors can see our business," he states, adding that being listed where the action is would also bolster the company's profile with potential landlords.
And a lack of clout with pushy Warsaw landlords, as well as unpredictable exchange rates, is apparently Coffeeheaven's bad fairy. Despite sales that continue to rise at spectacular rates (57 percent over the last six months alone), the three-year-old company's top-line growth is not yet translating into profits.
According to Michael Ovadenko, the firm's co-founder and managing director, the trouble is that developers expecting as short as eight- to 10-year returns on investments due to the perceived increased risk in Poland are in fact pushing the risk onto their tenants in a bid to minimize their own exposure.
"Shopping mall operators also have an unrealistic notion of the kind of profits generated by a specialty coffee and sandwich bar," he explains. "When you're selling quality coffee and fresh food, the costs are going to be higher."
Jarek Lipiński, director of the retail department at commercial estate agency Colliers International, agrees that some mall operators' rates can be sky-high, saying, "Złote Tarasy, for example, has certainly earned itself a bad reputation." However, he refutes the notion that the capital's landlords in general are unrealistic in their demands.
Though some malls tend to open negotiations with tall orders, they can be brought down, Lipiński maintains, adding that factors such as how long a company has been on the market and how much weight its brand name carries can all influence the prices asked.
"If Starbucks, for example, decided to move in, they'd probably get lower rents," he says.
Coffeeheaven, meanwhile, is already looking further afield, having opened two outlets in Prague.
Compared to Warsaw, Ovadenko believes the Czech capital is better planned and has a better cared for city center, which generates a robust high-street shopping culture as well as flocks of tourists - fertile ground for Coffeeheaven. But the company has further Central European ambitions too.
"If we can't get adequate returns on our investments in this country," says Worthington, "then we'll be moving swiftly on."
However, despite its threats and frustrations, Coffeeheaven continues to push on with its promise to open 50 outlets by the end of 2006, an ambition it has held since it first entered the market in 2001. With 22 outlets open in this country already, 12 of which are in Warsaw, and another eight thought to be in the bag, the company is well on its way to achieving this goal. And though still an infant, the chain is already the market leader.
Last December, Coffeeheaven became the first chain of coffee houses to boast wireless broadband Internet access, or WiFi, hotspots when it teamed up with Hewlett-Packard, the largest IT firm in the country. And although few believe that the venture will become commercially viable any time soon, it has certainly helped to generate hype in the media and bring Coffeeheaven to the attention of the business community.
