How Black Sheep Coffee plans to reach for UK’s high coffee standards
The founders said opportunities for small players are rising as big chains run out of steam.
UK-based coffee chain Black Sheep Coffee announced in January that it is doubling down on its expansion by increasing its store count to 130 from the current 53 by the end of 2023.
This confidence stems from its 89.7% first-quarter growth of £8.27m from £4.36m for the same period in 2022.
Catching up with Eirik Holth and Gabriel Shohet co-founders of Black Sheep Coffee, QSR Media asked them their thoughts about what’s interesting about the coffee industry and its massive growth plans.
What's new at Black Sheep Coffee? How has the brand been doing in terms of profit and moving towards your goals for the year?
Eirik: There's so much it's hard to know where to begin to be honest. We've launched a ton of new products and entered a bunch of brand-new markets. As for profit, we just think of it as a byproduct of delivering great value for customers so it tends to happen naturally. What's changed recently however is that our shops are profitable right from opening day whereas before it took a few weeks to get to steady-state sales levels. This is probably due to the fact that our brand is now widely recognised across the nation.
What have you noticed about the coffee industry in the UK? What's a unique aspect about it that you find particularly interesting?
Gabriel: It's a really interesting time for the UK coffee industry because the big chains seem to be running out of steam: Caffè Nero went into a CVA, Costa was acquired by Coke and is trying to get rid of its shops, and Starbucks is growing at a slower rate here than in almost any other market. This creates unique opportunities that you don't really see anywhere else. UK customers have very high standards when it comes to coffee quality and customer experience so you can't get away with nonsense and that's a good thing.
What are some of the recent menu innovations your brand has done?
Gabriel: We launched some incredible signature coffee drinks (think Vietnamese Iced Cold Brew or our revamp Black Hoof Coffee), a full range of Bubble Tea, and of course our puppicino (for dogs only).
Around three years ago, you secured £13m in funding from private investors with plans for global expansion, how have these been going so far? Please share some milestones.
Eirik: Yes, and we've raised quite a lot more since then. The money is always used to build new shops, invest in our people, and invest in R&D to develop new products. Milestones include entering every major city in the UK and becoming the most highly rated coffee company in the nation by customers on Google reviews, Deliveroo, Trust Pilot and other mainstream customer tech points.
Do you have more plans to secure funding again in the future? Why or why not?
Eirik: Yes, we're always raising money to grow. We like to avoid big PE and VC funds and instead prefer to raise money directly from our customers who love our coffee and share our long-term vision for the brand.
What are your plans for this year?
Gabriel: This year we would like to open shops in every major airport in the country, open our first drive-through location, enter the US market, and open some shops in the Middle East, starting with Dubai.
