DMH Brands lands eight-figure investment at £100m valuation
The group is aiming to be the UK’s next big multi-brand operator.
Economic challenges have impacted the F&B business in the UK, with government data revealing a 27% increase in insolvencies in the accommodation and food services industries as of April. Despite these challenges, DMH Brands founder David Hodgetts believes that diversifying revenue streams through creating multiple synergising brands is the key to mitigating risks in today’s volatile business climate.
This is why DMH Brands will have a coffee franchise called Dirt Coffee, with other smaller brands in the group’s portfolio like Just Tea and Sip Coco providing other options beyond coffee whilst targeting a retail option. David brings with him his previous experience in the coffee industry, having founded Triple Two Coffee before selling the business in 2023.
According to David, the group, which aims to be a multi-brand operation, has recently raised in under four weeks nearly eight figures in private investments at a £100m valuation.
In this interview, David talks about his new coffee venture, Dirt Coffee, what synergy means, and his targets in the next three years.
Your group is building a variety of brands, including coffee, tea, hot chocolate, and soft drinks. Can you explain a little more about these?
Each of these brands holds synergies with one another. Our coffee brand, Dirt Coffee is going to be a franchise rollout with three different models: a Grab & Go, focused on speciality quality coffee, A 'sit in' coffee and brunch model, speciality coffee with an excellent, 'current,' fresh food menu to back it up; and a Cafe Bar, which effectively is a coffee outlet during the day but as we approach late afternoon / early evening, we stay open 'late,' providing a great range of alcohol choices, cocktails, coffee and a comprehensive food menu.
This model will greatly increase average spending and also enable franchisees to maximise their revenue by operating for longer hours. We have already recruited a master franchise holder for Qatar a couple of weeks into our launch.
Our tea brand, 'Just Tea' will be the provider of tea for our franchise stores. Just Tea provides a full range of teas, and we are looking to compete with the go-to tea options currently out there. We will also be stocking our teas with retailers and other high street businesses, as well as partnering with some highly reputed businesses who will be providing our tea to their customers, many of them are 'TV' faces.
Our hot chocolate brand, 'Sip Coco' will also be the provider of hot chocolate for our franchise stores. Sip will be available for at-home purchases online, offering different varieties of hot chocolate, whether it is for coffee outlets where we have a more practical chocolate powder available, or if it's at home or for retail stocking we provide a luxury chocolate flake selection, in a variety of sizes and flavours. We have an agreement to provide our hot Chocolate to some highly reputable businesses & hotels already.
One business not mentioned above is the 'business builder.' The Business Builder provides a turnkey solution for anyone wanting to launch their own business, no matter what the industry might be. We work with select clients to create their brand and work with them to launch their business. There have been enormous successes with this during the couple of months since starting and I'm very proud to be working currently with one of the lionesses in creating a business with her. We have a couple of other household names who we will be starting with, including one of the biggest stars worldwide, and more will be disclosed when allowed.
The business builder retains a 20% equity stake in all of the business partner brands we work with, tying us in for a long-term relationship with them and giving DMH brands plenty of future value opportunities.
We also have three other product-based brands that we are launching in September, including the soft drink business. Each of these businesses, simple as a standalone I really believe can be incredible in their own right and they are all very scalable.
Why target entrepreneurs, sports people, and musicians for investments?
I've experienced raises before and I was fairly clear about what approach I wanted to take when it came to DMH Brands. Fortunately, that approach has proven to be rewarding. There is a fantastic mixture of investors, highly successful entrepreneurs, sports people & musicians and all of them in their field are 'winners' at what they do which just further solidifies the group and provides us with a perfect balance of individuals that are now a part of this journey.
Can you share any details about the partnerships you mentioned and what we can expect from them?
One of them is a lioness and this project is scheduled to launch in September. This will be a food & drink brand starting predominately online. The other two I cannot disclose just yet, but one of them is based in America and she is one of the most well-known individuals worldwide.
Having co-founded Triple Two Coffee and owning several retail brands, how have your past experiences influenced your vision and strategy for DMH Brands?
Massively, this I suppose is why entrepreneurs generally speaking improve drastically as they launch more businesses. I’ve had some incredible successes and been very fortunate to scale up businesses previously, but also I could almost write a book now on what not to do when it comes to building a business, selling a business and more. These experiences, both good and bad have created the perfect storm and momentum behind what I’m currently doing and I’m very excited to see all of this come to fruition.
What are the key challenges you foresee in the quick-service and fast-casual restaurant industry, and how is DMH Brands preparing to tackle them?
There has been a shift post Covid as we all know, where people are working from home more. This has benefits in certain locations, as people love to work from coffee shops, however, certain locations such as London working districts can be ghost towns on Fridays now, but rents/landlords don't reflect this. So from the perspective of DMH brands, having multiple businesses all with different revenue streams negates risk, from the franchisee's point of view with Dirt Coffee we are just being very selective with choosing the right location.
Looking ahead, where do you see DMH Brands in the next five years, and what are your main goals for the future?
Our three-year aim is to list the group with a £1b + market cap. I believe the group is perfectly suited for this as we will be so dynamic, and there will be a real appeal with the variety of brands we are building as well as some of the people involved. Short term I’m looking to close our investment at the £10m mark, giving us a fantastic base to operate our business properly then we will be focused on launching our brands and building the Dirt Coffee Franchise. I’m very excited.
