Coffee Republic: Bobby Hashemi
Bobby Hashemi tells how he and his sister woke up one day and smelt the coffee
Name: Bobby Hashemi Company: Coffee Republic Founded: November 1995
For a nation of tea lovers, the British drink a lot of coffee. Whether it's the growing influence of continental Europe or just a simple change in tastes, research shows that coffee has actually replaced the traditional cup of tea as the nation's favourite drink.
And as ever, where social trends develop, business follows closely behind. To supply the growing demand for quality fresh coffee, a burgeoning sector of coffee bars has emerged – and established itself to the extent that there is now a Starbucks or a Costa Coffee in almost every high street, train station and shopping centre the UK.
Coffee Republic was one of the coffee bar chains to pioneer the market in the mid-nineties. It was founded by Bobby Hashemi, a man who, like all true entrepreneurs, is constantly on the look out for new business ideas. The concept for Coffee Republic was sparked by an idle chat with his sister who had just returned home from a holiday.
“The idea came from the US where my sister was travelling as a tourist in New York. She discovered that there were coffee shops everywhere, a Starbucks on every corner, and while she was there she got hooked on the tall slim cappuccinos they served. When she came back, she told me how much she had liked these places, and commented that there were not any in this country – and a lightbulb went on in my head. We did some research, discovered that people actually drink more coffee than tea in the UK but that there were no outlets serving this market. We had found a niche.”
Gap in the market
As any businessperson will tell you, the secret to a successful enterprise is to find a gap in the market. Bobby was quick to focus in on where exactly this gap was, and how he was going to fill it.
“What was available in the UK basically wasn't up to standard. To have a good coffee, you had to go to a restaurant, sit down and wait for a waiter to serve you. Alternatively you could go to a sandwich bar where the coffee was invariably poor quality. We therefore found a gap for a 10 minute gourmet coffee experience at an affordable price.”
Encouraged by the discovery, Bobby and his sister founded Coffee Republic and opened their first store in Mayfair, London in November 1995. However, it wasn't long before Bobby realised that his business would not remain a single shop operation. Expansion quickly became a core strategy for the business.
“The first store in Mayfair took off pretty quickly and within six months I realised the business was going to work. So we went to the business angel market and raised £600,000 to fund the opening of five more stores.”
It is notoriously hard to convince private investors, or business angels, to part with their cash. Bobby is proof, however, that if your business plan is solid enough, they can be a very good source of funding.
“It's supposed to be difficult raising funds from business angels but I didn't find it so. It was a good idea and in the end I received offers for double that amount.”
So which elements of the business plan did Coffee Republic's investors find most appealing?
“The product is good quality, convenient and at an affordable price. Our customers are pretty broadly spread depending on the location of the store. We attract the suits in the City, and shoppers in the stores situated in shopping centres. Up North, our customers tend to be older.
“There isn't really a specific target segment that one can outline. The wide appeal is what made the idea so attractive.”
This also meant that Bobby wasn't concerned about the threat posed by large multinational competitors such as US-chain Starbucks or Costa Coffee.
“The market is big enough for the top three players. That is ourselves, Costa and Starbucks. We actually choose locations where there is already a Starbucks, for the same reason that Indian and Chinese restaurants locate close together – it attracts a larger catchment area.”
With the business angel money in the bank, Bobby set about expanding the business. Conscious of the danger of over-stretching his company's resources, expansion was limited to the London area to begin with.
However, the outlets continued to thrive and the chain quickly expanded beyond the capital until, before long, a Coffee Republic outlet could be found in nearly every major town in Britain. Only six years after the first store was opened, there are now almost 90 stores throughout the country. But how did Bobby ensure that such a rapid expansion programme could proceed as smoothly as possible?
“There are always problems related to expansion, always challenges. The key is having the infrastructure in place ahead of growth, and hiring ahead of growth. If you don't, you find you're chasing your own tail.”
“Getting the right staff is a high priority. We have a strong HR (human resources) department and have a pipeline of people coming through that. Also word of mouth plays a large part – young people who work for us recommend their friends, for example.”
Having successfully built a thriving business with almost total coverage in the UK, you would be forgiven for thinking that Bobby might like to sit back for a while to enjoy what he has achieved. Far from it. Showing the ambition and drive of a born entrepreneur, he continues to push for even higher standards.
“The company's mission is to open 200 stores and to become the main competitor to Starbucks not just in the UK but also internationally – and we believe we're well positioned to achieve this.”
Top five tips
Bobby Haschemi shares his five most valuable pointers to success
- Plan ahead: understand and plan exactly what your growth objects are and raise more financing than you need in case of contingencies
- Don't disappoint: when selling the concept to an investor, always under promise and over deliver. This will put you in a much stronger position
- Hire good people: when you are expanding, always hire people more experienced than yourself in the area that you are moving into
- Control costs: whatever business you are in, it is always important to have very strong financial controls in the company
- Be ambitious: don't be afraid to take risks. Starting a business is a risk. It's a question of not being too conservative otherwise you'll never grow
A lightbulb went on in my head.