Coffee Heaven (Poland's biggest coffee chain) for sale

I found this in a newspaper today - seems cheap in relation to the size of the company.
telegraph.co.uk/finance/newsbysector/retailandconsumer/6790624/Whitbread-to-buy-Polish-coffee-chain-Coffeheaven-for-32m.html

"Costa-owner Whitbread is in talks to buy Coffeeheaven, Poland's biggest coffee chain, for £32m.

There are around 1,000 Costa coffee shops in the UK and 400 abroad. The companies are in advanced talks over a cash offer of 24p a share.

Coffeeheaven is the market leader in Poland and also has cafes and sandwich bars in the Czech Republic, Latvia, Bulgaria and Hungary. The company is listed on London's AIM market.

Coffeeheaven reported a first-half loss of £554,000 this year, down from a £684,000 loss the previous year

telegraph.co.uk/finance/newsbysector/retailandconsumer/6790624/Whitbread-to-buy-Polish-coffee-chain-Coffeheaven-for-32m.html

Its "cheap" cause they are losing money. I don't like the chain much anyhow. They go too much for the New York style with paper cups. There are much better cafes in Poland.

I don't drink coffee myself, so I must take for granted what dcchris says: there are much better cafes [than Coffeeheaven] in Poland.

It is probably why they report losses rather than profit, but one should notice they improved on first half year-to-year losses around 15%. Costa is certainly a better run business than Coffeeheaven. I wonder who owns the latter, how many coffeeshops they own in Poland and abroad (Costa has 1,000 in the UK and 400 abroad), and what is London's AIM market where Coffeeheaven is listed. Is AIM something similar to the Warsaw Stock Exchange's "newconnect" market?

The forerunner of AIM was the USM. The London AIM seems similar to "newconnect". Its a market for companies with a relatively small market cap, where they can raise funds through IPO and be traded like the big boys in the FTSE.

Coffeeheaven seems like it has British based directors and probably favoured the AIM as it seems better regulated than "newconnect" and more attractive for potential buyers.

Would be a good tie in with Whitbread who are offering 24p a share, current price 22.5p - looks like I'll place an order for Monday :-)

Coffeeheaven

Costa have a few here in PL. The owners of CoffeeHeaven are a couple, one English, one Polish. They live in London.

CoffeeHeaven is huge here, shops everywhere, but a problem for them is that they expanded a bit too fast.

Thanks for the link, Szkotja. I've just found out that as of October 2009 the coffeeheaven group has 92 trading sites - Poland 62 : Czech Republic 15 : Latvia 8 : Bulgaria 3 : Hungary 4; many more sites are under contract or subject to contract in all five countries.

In my view, their deal with Whitbread has every chance to succeed. £32m is not much for Whitbread, and the owners of Coffee Heaven might be quite happy to get rid of coffeeheaven as it never made profit according to its income statements since 2005.

As to placing an order on Monday, in real terms it would be placing an order for Whitbread shares rather than Coffeeheaven shares.

Whatever they do to coffee heaven I hope they leave the Choclete Chip Cookie alone, my personal favourite ;) loosing only to a classic muffin from starbucks..

Whitbreads offer of 24p has just been accepted.

I always had the impression that they were trying to follow the business model of Seattle Coffee Company anyway (i.e. open before the big chains and then be bought by one which wants to start/expand operations in Poland). Any thoughts about what Whitbread will do with the brand? Keep it or rebrand all the shops as Costa?

"The recommended offer represents a premium of 25 per cent to Coffeeheaven’s closing price of 19.25p per share on June 11, the last business day prior to the announcement of the initiation of discussions."

I didn't know they started discussions as early as on June. But from then on it must have been pretty clear that the deal was likely to get through, knowing that Costa had the intention to expand and CoffeeHeaven (COH) may have wanted to follow the business model of Seattle Coffee Company, which seems to be an accurate assumption. Thus it was quite imaginable to buy at about 18p between the 11th of June and the 11th of December with a prospect of gain; certainly not a Buffet-style gain, but still a nice 30 per cent premium ...

I wonder how much money the owners of COH have put on the table several years ago to cash on their investment now ...

Like most small cap companies on AIM, Coffeeheaven had small volumes and trades which gave the price around a 5% spread.
In other words you had to be convinced of more than 10% rise before you could think about making a profit.

I'm amazed they can be losing money with the margins they are making - its always fairly busy and the prices are astronomical by Polish standards - yesterday I had a big coffee, a sandwich and a biscuit and it cost 30 zloty. There are many lower end restuarants or even reasonable pizza places where you could get a full meal for that price

To be fair it was what I wanted at the time, served quickly and perfectly acceptable. However it was by no means top quality ingredients and by comparison a very tasty sit down burger with a couple of beers in Hard Rock in the very center of Warsaw cost only 49 zloty - 100 metres away from the same Coffee Heaven.

I can only conclude that like most Polish retail lessees they are paying vastly inflated rents which they agreed to when they were inexperienced. I think the concept is good (and especially that they are one of the few places you can get a sandwich early in the morning) but honestly reckon they would do more for the bottom line if they dropped their prices slightly and aimed at the lower middle class. 30 zlots is 3 hours wages for a lot of average Poles.

You've raised an interesting point here. As a former Warsaw stock market private investor I feel inclined to inspect Coffeheaven's balance sheet and income statement in more detail to see what is the reason behind their loosing money. If anyone wants to join into this case study exercise and then share their findings, please do ...

I know what you mean. Last weekend my girlfriend and I got two coffees, two sandwiches and one slice of cake to take on the train: total cost was 77zl! As a comparison, that day before we'd been at u Szwejka for lunch and each had a bowl of soup, a steak and a beer. Total cost for that was 103zl.


That and the fact that they have expanded very quickly and so must be faced with huge start up costs and a fair bit of debt to service too.

Harry

I noticed that one of their rivals, Voyage (which I always preferred) seem to have gone bust. Green Coffee should roll out more shops - similar prices to Coffee Heaven but much better quality and ambience.

Karma (pl. Zbawicela) is good too, but they only seems to have a couple of branches.

I'm for the option that Costa will rebrand the coffeeheaven shops. Judging from what you said about the price/quality value they have not much to loose by doing this ...

I'm not a fan of Karma at all: the coffee isn't as good as coffeeheaven (let alone Green Coffee), the service is usually terrible and the vast majority of the clientele irritate the f*ck out of me!


Costa is more expensive and lower quality.

The service is bizarre isn't it, clientele too - it seems to attract very loud Americans talking about their investments on the money market. Some of the students who go there are nice eye-candy though.

They have quite fast wifi though and the food's usually ok. Quite good for sitting outside in the summer.

Do they not have pubs, you big puff? :-)

At breakfast time? For hair of the dog?? Or before a sales meeting, so they take pity on my slurred speech and wobbly demeanor???

Karma Coffee sell alcohol too, if that's what you want.

All tongue in cheek jonni.

Besides you only said sitting outside in summer and none of the above.

Could be a good idea for a sales meeting though :-)

Do the majority of Coffee Heaven customers actually spend that much money there? Seems to me like a lot of them just nurse a coffee there for a few hours.

They also tend to have a lot of staff in each of their premises which means for quick service but higher costs i suppose. I also imagine they have a lot of wastage from their sandwiches as I've rarely seen anyone buy one.

I figured. Groaning with an all-day hangover at the moment, and needing some of Coffee Heaven's products before the hell of pre-christmas tesco.

I agree with your opinion.

Good luck!

Jonni is very svelte actually.


A problem very easily solved by going to the Hilton for Christmas day brunch. There'll be the traditional spare seat at our table, you're welcome to come and fill it.

Harry

What a lovely suggestion - thanks!

Unfortunately I'll be tied to the stove, due to Polish and Ukrainian guests coming. All traditional English food (I'll pretend Vodka Margarine is a regional alternative to Brandy Butter). They've already left a kind of herring salad (shocking pink and studded with pomegranate seeds) in the kitchen. All four Christmas cakes are made, hundreds of mince pies, and I still have to go to Tesco for the important stuff.

If I just go to the petrol station instead, do you think they'd believe Pot Noodles and Snickers are traditional British festive food?

By the way, I'll probably be in Bar Below today or tomorrow, to have a drink there before it's turned into something else (a Turkish disco if rumours are true).

Lmao worth a try.


Good lord, can you imagine the music and the clothes.

That's a pity. Although Hilton are also doing a Boxing day brunch if you fancy a day off cooking.


I would be surprised if you can't get brandy butter at M&S. They certainly had it last year and I'm pretty sure I saw it next to the Christmas puddings there this year.


Don't go there tomorrow, it's closed all day. As for rumours about it turning into something else, don't believe everything you hear! I can't say anything more than that at the moment.

I can confirm they have it this year. All the Christmas Cakes are sold out though (at 79zl a pop) which is why I had to make them. The ingredients were so expensive it would probably have been cheaper to go to M&S.

I was only joking about the Vodka Margarine. My mother's from Cumberland so I usually do Rum Butter (and Cumberland Pudding to go with the main course). But this year, maybe M&S could save a lot of time.

Back to the topic of the thread, I've noticed quite a few coffee chains opening recently - three new ones in Dworzec Centralny recently, plus Starbucks starting to roll out. I wonder if any of them make any real money?