Dirt Coffee targets lower-cost franchise growth

DMH Brands plans more than 100 sites using smaller units and lower rents to prioritise franchisee returns.

DMH Brands is pursuing a lower-cost coffee franchise model as it seeks to expand Dirt Coffee to more than 100 sites while addressing financial pressures facing UK franchisees.

David Hodgetts, CEO and founder of DMH Brands, said many quick-service restaurant franchisors prioritise brand visibility over franchisee profitability by selecting expensive locations and requiring high upfront investment.

He said high rents, rising labour expenses and increasing goods costs can delay returns, particularly for inexperienced operators who may not fully understand the financial demands of launching a franchise.

“I don't think it's made clear enough for franchisees that it will take them a long time to get the return on their investment,” he said.

Dirt Coffee aims to reduce that burden by opening in locations with substantially lower rents and using smaller, less conventional formats. Hodgetts said its sites are expected to require significantly less capital than competing coffee franchises.

The company recently opened a site with annual rent of £14,000, compared with a Wimbledon location Hodgetts said could have cost more than £100,000 under another coffee brand.

DMH Brands is also preparing to open a telephone-box outlet near St Pancras Station, requiring one employee and a lower investment. The group is considering residential and other unconventional locations as it expands domestically and explores overseas opportunities.

He added that expansion would remain secondary to outlet economics.

“So it's franchisee first, and then the brand comes second, rather than the other way round.”