Kaffee-Schnäppchen und Kulturkampf: LAP Coffee-Gründer Ralph Hage (#873)

Es ist eines der meistdiskutierten deutschen Startups, von Feuilleton und Gesellschaft bis hin zu natürlich Wirtschaftspresse. Oder anders formuliert: Da kommt ein Libanese nach Stationen als Investmentbanker in New York nach Deutschland und arbeitet hier in der Startup-Szene, gründet dann eine Kaffeehauskette namens Lab Coffee, gerät in einen Shitstorm und mittlerweile ist er Talk of Town, weil er auch natürlich Firmen angreift wie Starbucks, wie McDonald's mit ihren McCafés. Aktuell schon über 25 Standorte gibt's von Lab Coffee. Die ganze wirtschaftliche Lebensgeschichte von Ralf Hasch, dem Gründer, die gibt's jetzt erstmals als großen Podcast hier bei uns. Es ist ein Bingo-Spiel auch von verschiedensten Unicorn-Namen der letzten Jahre. Der Ralf war hier sehr, sehr umtriebig und jetzt halt Lab Coffee. Warum?

Wieso?

Weshalb? Auf geht's! Let's go! Go! Herzlich willkommen beim OMR Podcast mit Philipp Westermeyer. Wer selbst gerade gründet oder eine kleinere Firma übernommen hat oder Ähnliches, der kennt möglicherweise das Problem. Ein klassisches Geschäftskonto heißt oft Filialtermine, Papierkram und lästige Wartezeiten. Dann gibt es im Arbeitsalltag meistens getrennte Tools für Banking, für Rechnungen und für Buchhaltung, und das alles kostet einfach sehr viel Zeit und ist meistens nicht optimal aufeinander abgestimmt. Und genau hier kommt unser heutiger Partner Qonto ins Spiel. Qonto mit Q am Anfang macht euch das Leben deutlich leichter. Ihr könnt ein Geschäftskonto Konto mit deutscher IBAN in nur 10 Minuten online eröffnen, und zwar komplett ohne jeden Papierkram. Und den Einstieg gibt es bereits ab 0€. Außerdem, und besonders praktisch, das Banking, die Rechnungen, die Buchhaltung, das Ausgabenmanagement kann man dann in einer App machen, nämlich in der Qonto-App. Es gibt außerdem Firmenkarten mit bis zu 360€ Cashback pro Jahr, einen persönlichen Kundenservice und über 2000 Integrationen, unter anderem für Lexware oder für DATEV. Das System von Qonto wächst dann einfach mit euch mit. Vom Start für Selbstständige bis zum Team mit über 250 Mitarbeitenden. Wer einmal wissen möchte, wie gut das Ganze in der Praxis funktioniert, der ist eingeladen, bei OMR Reviews unsere Bewertungen dazu durchzulesen. Die sind komplett neutral, würden unsere Bewertung natürlich niemals anfassen, und dennoch wird, glaube ich, klar, dass Qonto einen sehr, sehr guten Job macht. Alle Infos zu Qonto unter qonto.de.

I'm sure many of the listeners here have already checked it out and used it and ordered at Lab Coffee. Lab Coffee, one of the hottest stories in the German startup ecosystem. And surprisingly, maybe the founder has a German name, but is Lebanese. His name is Ralph or Ralph Hash or Ralph Hage. Welcome, Ralph. Hi. Thanks, Philipp. Thank you for having me.

I mean, that's a good opening.

Yeah, but it's true.

I mean, I mean, reading your name for the first time, I was like, Ralf Hage, that's 100% German. Yeah, but it's— I mean, you're born in Lebanon.

Yeah, I was born in Beirut a very long time ago. 37 years. Yeah, to be exact. You can probably tell from my white hairs. And yeah, I mean, spent early parts of my childhood in Lebanon. Small country by the Mediterranean. Great place to grow up. But, you know, comes with a rich culture and rich history. But also very early on realized how small this place was, and I wanted to you know see the world. So for the last twenty years, I've been living and working in different parts of the world, from the U.S. to Europe, Asia, and the Middle East. In fact, I started working at a very young age, around sixteen, did different jobs in hospitality. Then I worked for Red Bull when I was in university, and then I graduated in Beirut for Red Bull Middle East. Really fun job, great marketing school. Still have a lot of learnings from those days. Then I went into finance, which is because I graduated in banking and finance.

And you went to school or university in Beirut?

Lebanese American University. Yeah. And that took me all over the world. So for a while, I was a commodities trader, then an investment banker in places like Shanghai, Dubai, New York, until eventually I realized that this wasn't necessarily me. You know, I wanted to be a creator, a builder, not only pushing numbers. So I left the banking days. And in New York, I started my first company. It was a fintech business. We couldn't get the banking license and eventually ended up leaving New York and joining my first German tech company, which was Quandoo at the time. That was the first exposure into the German tech ecosystem.

Quandoo, that was a Also part of Rocket Internet ecosystem?

Close, but you know, as you know, in Germany, a lot of, a lot, there's a lot of overlap between Rocket and a lot of the companies of back in the day. And spent a couple of years there. After the acquisition of Quandoo, moved over to Delivery Hero, where I was for a couple of years.

I mean, Quandoo, what do they do exactly?

It's basically OpenTable of Europe and Asia and the Middle East.

That was sold, I think, to a Japanese company, right?

To a Japanese company, to a holding called Recruit. Which acquires lifestyle brands in Europe. Amazing scaling story, very aggressive culture, learned a lot, and still very close friends with a lot of the people that I met there. And from there, I moved over to Delivery Hero.

That is at the time Lieferheld and those things.

It was already basically a bigger conglomerate that was doing acquisitions in different parts of the world. So I joined at a time when Delivery Hero had acquired or basically took over parts of the food delivery businesses of Rocket Internet in the Middle East. And that's the part of the business that I looked after. So 7 markets in the Middle East, 4 different companies, did every job in the sun. So from restructuring the market, M&A, post-merger integrations, managing global partnerships, creating new products, so on and so forth. and eventually supported the business in their IPO process. MENA was the only profitable market at the time.

MENA is like Middle East and—

Middle East and North Africa.

Yeah.

And then—

So your business was profitable?

My business? Yes, at the time. Delivery Hero.

Yeah.

And I mean, incredible business, incredible journey. I think it was a great learning curve for me and massive exposure, not only to the German tech ecosystem, but to a vertical that at the time was really growing. And Delivery Hero, in my opinion, is still at the forefront of the delivery space in general.

Delivery Hero is funny that you mentioned this because it's like one of the very few German tech companies that are like internationally operating and relevant in a way.

Absolutely. And it's interesting to think that there hasn't been, I don't know, think about the last one or two decades, you know, big consumer success stories Outside of Germany, right? Or from Germany going abroad. And I think this is something that should change because the German market is actually a massive market. There's some of the smartest people and some of the best companies that I've seen operate out of Germany. And I think, I hope that in the next years, we'll see more success stories coming out of this.

I mean, but let me get this correct. You came to Germany in the end by accident because the Quandoo guys, they convinced you, they were interested in your background, I guess, like developing their Arabic business made sense, like from the Lebanese person. So you sort of stumbled into Germany. It was not a conscious decision. I want to be in Berlin. I want to be in Germany. It was like looking for a job and you ended up there.

Yeah. I mean, don't get me wrong. I've always loved German football and German cars, but my, you know, it wasn't in my plan to actually move to Germany. My intention was to always be a banker in New York. And I achieved that. And at some point, you know, realized maybe this is not necessarily where I wanted to be. And then left New York by chance, ended up in Berlin. So after my experience with Delivery Hero, decided to move here because my entire network that I had built at the time, most of the people that I was working with were based out of Germany, right? Primarily in Berlin. So I thought, you know what, it's a very interesting market, great developing ecosystem. Let's move there and see what happens. And it was A very easy transition. I had great projects and offers on the table, ended up working with companies like Omeo and WeFox doing different things. So that helped me really expand.

So you were sort of a consultant then, as a startup consultant in a way?

I joined for a specific reason. So in the case of Omeo, for example, they wanted to build a new vertical, which was the long tail of logistics and airport transfers and buses and ferries and so on. Joined to basically help put that department together. After a while, moved on, did a project for WeFox, knowing the founders, worked with them closely on an internal project, basically. And then on the side, built a quick commerce business in the Middle East, which actually recently just got acquired by a big supermarket chain.

Is that Knock Knock?

Exactly. You know enough. Knock Knock was ultimately, the technology behind it was licensed to eventually what became Gorillas. So that's how the company—

I can imagine like you sitting there in the middle of Berlin being connected to all the— I mean, your resume reads a little bit like a bingo card for unicorn names. I mean, some of them already like not so much unicorns anymore. VeeFox, I think, is out of the unicorns range now. And Omio, I don't even know how well they're doing. But I mean, you've been involved in tech coming out of Germany and being Built in Germany, and then you had this delivery business software that you built on the side.

Yeah, so Knock Knock was a side project, right? At the time, we actually wanted to bring the business here to Europe. Looking at the economics, and this is pre-COVID, realized that, you know, at a time when Foodora was leaving the market, at a time when Deliveroo was leaving the market, at a time where, I don't know if you recall, but we had no Food delivery businesses besides the Ferrando in Germany, realized that this is not the right timing, and the economics would be extremely difficult to to to make it work. So decided not to do it. And then, as you said, by chance through network through you know my current investors got to know Khan at the time who was Khan Khan Zuma the founder of Grillas.

Yes. Yeah.

Who I got a call and and basically I'm a very relationship-driven person. I don't like to say no. So I told him, give me a couple of days, let me think about how I can support, and eventually offered to license the platform to him and brought my friend who built it into the business, and he became the co-founder.

And then you founded your first real full-time company, correct?

Yeah, but very quickly, without being operational with the guys, I went into building Yababa. It was a personal project of mine. The original intention was for this to be a brick-and-mortar business, a retail business that basically offers international groceries. So being an immigrant here, I was building a product for myself and people like me. So the idea was to get food from home, not only from the Middle East, but also from other parts of the world, products that you don't find in German supermarkets, which are often really hard to find or nonexistent here. So the idea was to basically build the supply chain in order to bring those products more easily to the customer. So the delivery model was slightly different. It was not quick commerce. It was more like a picnic than a Gorillas.

What type of food were you thinking of? I mean—

Anything from high-end olive oils to super affordable canned products that you don't find here. Yeah, ultimately, you know, we put the business together as a tech company, as a startup, raised from some of the best VCs in the market here, and then scaled it to 4 different countries. We were based out of Germany, had 3 warehouses here, delivering through 3PL, which is third-party logistics, to France, Netherlands, and Belgium.

So because of COVID you did not make it a real retail business, you made it a delivery business, because that was at the time was the thing to do.

Exactly.

You were very close to Gorillas, you know the playbook. And then you said, okay, I'm basically building, in quotations, you're building Gorillas for Oriental food or for like rare products.

Exactly, which is basically a part of the market that no one was really going after or tackling, which is a sizable part of the market. If you look at countries, you know, where you have a large immigrant population like Germany and the neighboring countries here, there's a sizable population to go after. Nevertheless, it's still a grocery delivery business, requires cash to scale. We were doing at our peak around half a million revenue per month, but comes the market crash, it became extremely difficult, not only for us, but for most consumer businesses, especially delivery businesses.

And was it like Berlin-based?

We were based in Berlin.

And then, I mean, you needed like a larger immigrant population probably to make this work. Was it German people buying?

It was a combination, but the majority was basically an immigrant population or foreigners. Buying products that either because they love to cook and these are products that they need, or because this is what they eat at home. And in the past, you didn't have the ability to actually get that delivered. You would have to drive maybe 30 minutes, 40 minutes, get to a certain supermarket wherever you live and basically carry all that stuff, put it in your pantry and shop for a month and then do that again and again and again.

So in theory, it sounds correct. I mean, you saw the Gorillas model succeeding at the time. you look at, okay, what else is there? You see all the specialty food categories that you mentioned, and then you're like, why not build a Gorillas for those target groups and with those products?

And at the time, we had really good examples elsewhere in the world, especially in the US, a company called SayWe focused on Asian products based out of SF, scaled significantly. And at the end of the day, right, this is, you know, food is a very special a special part of our lives. And, you know, for me coming from where I come from, but also I know that I'm not the only one here, we have a personal story with food, right? It's what brings you closer to home. And these are the products that remind you of your childhood and so on. So for me, it was a very personal story. For others, it's, you know, a necessity. And we wanted to make it easier for people to get access to products they like.

Okay, okay, okay. But then the zeitgeist shifted a little bit and COVID went away and those delivery businesses, guerrilla-type businesses ran into problems.

Exactly. So when the market crashed, you know, investors that had invested in those businesses obviously were cash-strapped. The market was not on an upwards trend. So it was very difficult to keep the business going without additional liquidity. And this is probably one of the biggest learnings that I take out of that business. I think failure is an essential part of entrepreneurship and is a big lesson that I always go back to. But at the end of the day, the one thing that I left with that experience, which was quite painful for me at a personal level, is if I was to do this again, I would want to build a profitable business that can survive in any market condition. Because if you look at our unit economics, or at least at the infrastructure that we've built, we had a relatively healthy business. We needed additional funds to grow it and scale it so we can become a profitable business that doesn't need to raise again. But because of timing, the market crash was much more painful. So we had to downsize the business. And I did, you know, 3 rounds of layoffs that year. It was quite a—

What happened in the end? Did you sell it or did you like shut it down?

Eventually we shut down the business. I think it took a toll on everyone. And, you know, despite the great, I would say, memories that we have from that experience and The very happy customers that we had, we had a really loyal fan base. The business became so small after downsizing it that it was just basically a no-brainer to shut it down.

Out of curiosity, I mean, and also I spoke to one of your investors at the time recently, and he speaks very highly of you still. I mean, even though he lost his money, I mean, he lost his money with your business.

Yeah, I mean, I think we did the best with what we had, and I think we were efficient in many ways, but let's say less efficient or did not predict the outcome of a market crash fast enough for us to be able to react and, yeah, build a—

So you shut it down and then there was a day you sat in your apartment and you were sad and lonely and then you decided, okay, I'm doing something else and now then you decided to start Lab Coffee or how did that go?

More or less. Well, basically, I think I've had the opportunity and I've been lucky enough, as you mentioned, to see different companies at different stages in life cycles, from early stage to growth to IPO. And I consider that a privilege. And at the end of the day, I just went back to what I loved most because I said, if I wanted to do this, I want to do something that I know founding a company can be very painful. I know how challenging it is to be a founder and an entrepreneur. And you make a lot of sacrifices actually along the way. So it had to be meaningful. And I wanted to go back to what I loved the most, which is F&B, hospitality.

But for you, it was—

People.

You were never in doubt that you were gonna build something else again. I mean, even though you had to shut it down, you were like, okay, next one.

I definitely felt that job wasn't done. I felt that that was a bit of a forced closure of a chapter, whether it's due to internal reasons or market conditions. I felt that I had a lot to give. I felt that I would have been able to make something out of that business. And obviously it happens. There's great businesses that have gone through difficult times. So definitely it wasn't a job done. I wanted to build again, but I also wanted to take my time. And also wanted to decide what is it that I wanted to build. I was getting tremendous amounts of offers from investors, from unicorns, from people that wanted to either build something from scratch or work together. And like I said, it's a privilege. It's a privilege. And I couldn't do it, you know, either because it was too fresh or because I didn't want to do healthcare. It didn't have a personal meaning. It didn't have a personal story with me. So And like I said, you know, it's quite painful to build a business again. You go through a lot as a founder. And on these lonely nights and these lonely days when things are not working and you have to work overtime, you always have to go back to why you're doing this. And that's the thing about Lap. It's a much bigger story for me than just—

How did Lap come into your life then? I mean, after Yababa was over, How much time was between those two businesses and how did you find the lab idea?

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I'm very familiar with coffee in general. I don't know if you know a bit about the history of coffee. It was called wine of Arabia. There's a big story between coffee and the Middle East. And it actually, even though coffee originates from Ethiopia, it was first consumed in courtyards in Yemen. when it first turned into a beverage. Before that, it was being chewed. And it traveled through the port of Alexandria from Yemen to Europe, to the UK, where the first coffee shop was established, still open until today, and then continued to the modern world all the way up until Seattle.

To Starbucks.

Exactly. To Starbucks, where it was modernized or it was spread to the rest of the world. So I grew up with coffee being a big part of my culture. To me, coffee is a ritual, it's not a luxury. It's something that you would consume on a daily basis, multiple times, you can afford, and you consume with friends and family. And it's something that brings people together. So it's always been a connector in my life. I didn't necessarily think that I would end up building a business in coffee. So to answer your question, how did that come about? So obviously, we were seeing a lot of innovation happening outside of Germany in coffee. And that's something that we noticed with companies like Blank Street, companies like Flash in Asia, companies like Luckin in China.

Luckin Coffee, huge business in China, right?

Massive business in China. Actually, the scale of that business is really enormous.

They have like thousands of stores.

26,000 today, which is crazy to think, right? We have 25. So slight difference. And at the time, going back a bit to the Yababa story, thinking about food from home, as an immigrant, home doesn't easily translate. So anyone who's lived in different countries and in different places knows the importance of having community.

Mm-hmm.

So LAP was a bit of a natural transition for me, because I see it as a platform that connects people over coffee and shared experiences. So there's a personal story of LAP that is, you know, and there's a reason why it's called Life Among People.

That's what LAP stands for.

That's what LAP stands for, because at the core, we didn't want to build just another coffee shop business. We wanted to build a community business with coffee as the connector. So that's on the personal side of the story. On the business side of the story, looking at what was happening outside of Germany and going back inwards to understand the market here. I don't know if you know that, but Germans drink more coffee than beer, which to me was—

Most of the time Germans drink coffee at home.

Exactly. So, in fact, Germany is the largest market for coffee in Europe based on consumption per capita. 50% of Germans drink coffee At least once on a daily basis. But the majority of the coffee, as you said, is consumed at home. So, only 1 out of 10 coffees in Germany is consumed out of home versus in Italy, where you have 4 to 5 cups of coffee are consumed out of the house. And this is where the biggest potential is. Now, if you also think about what's been happening in terms of innovation in coffee in Germany, we haven't seen much change besides specialty coffee. which today is less than 3% of the overall market. So the way the product is consumed, the way it's bought hasn't really evolved while there's a lot happening outside of Germany. So we saw that this is a massive opportunity, and this is why we decided to build the coffee shop business in Germany today.

And was there any alternatives, any other stuff that you looked at? I mean, I imagine, like, I mean, okay, food is something that you felt close to and you were looking at something, you know, close to home and community building and all this. I get that. But there must have been other ideas in your head over the month that you were thinking about a new model.

There's always a lot of ideas in my head. And somehow I realized fairly quickly that this is the model that I wanted to focus on. Again, like I said, I think the connection to the product itself that I'm very familiar with, the connection to the potential of turning Lap into a community business, was very clear to me from the start. And this is something that I felt very connected to. I'm a very relationship-driven person. I like working with people. I like consumer businesses. And, you know, something clicked in my head and I realized—

And you saw the success of coffee brands?

I saw the potential for sure. And, you know, ultimately we were able to put together a team and the possibility of starting the business with one location. I mean, the first the first store was where was the first location? Rosenthaler Platz in Berlin.

And funnily enough, it was the heart of Berlin. Like that's where like the Berlin yeah is is at its center.

I feel very special story because this is where I had my first coffee seven years ago with Food Labs with someone from Food Labs who today is my investor. And that place was a coffee shop for the older generation listening here.

Rosenthaler Platz.

This is where Café Oberholz is. I mean, Café Oberholz, I don't know if you know that, is like synonymous for like digital people 25 years ago in the, you know, turn of the century when everything started. I was at Café Oberholz in Rosenthaler Platz. And now it's the First Lab Coffee. Okay. Yeah.

And we're just literally down the street from there. And that coffee shop was called Lecker Mokka, was absolutely loved by everyone in the neighborhood. The families and their kids used to go there for coffee and ice cream. It's an Italian guy who unfortunately during COVID lost the motivation to continue. And like I said, everything in life happens.

And he sold his store to you?

He wanted to give up the store and my office was across the street. I was sitting there working on the business model and then I could see the store closed. And eventually we asked to talk to him.

So you were sitting in an office thinking about a new coffee chain And then across the street, like a coffee spot closed.

Yeah, exactly. I mean, it was closed before that, post-COVID, and he really wanted to go back to Italy, and that's how we got our first store. And to be honest, we had our doubts because, you know, we've been in the market now for 3 years. There's been so many learnings along the way, but this was our first location. So whatever small capital we had to invest in that store, it was basically everything that I was giving, right? Myself and my co-founder. Coming out of now, you know, another startup, right? And a tough experience, you know, there was always going to be some doubts whether this is the right location or not. And now, you know, we've perfected that expansion model. We understand exactly what we're looking for. We know what works and what doesn't for us. But it was a big step for us.

Were you like basically servicing the customers in your first store yourself? Absolutely.

It was us the first 6 months. We even tried to do things with different architects, we couldn't make it happen. We ended up doing a lot of stuff ourselves from building things, moving things around. The store looked very shabby and very basic in the beginning. And we realized that actually we want that minimalism. And it's also what worked best for us because the format that we wanted ultimately to scale and to focus on was this grab-and-go format. which is what we call micro-retail, right? Which gives us the ability to offer affordable but very high-quality products as high as we can while having profitable unit economics. So ultimately, it was a great opportunity to take that store because of its size and the limitations that it gave us.

How big is it?

Quite small, 50 in total square meters, but the front of house, which is what we use, is almost half. So in reality, we worked with the limitations of that first store, and organically it trained us to develop a strong business model with size and location constraints.

And you're selling coffee only?

So if you break down our business model today, we have small footprint locations that have highly efficient operations and a small but focused menu. So the way we've designed our menu is roughly around 15 items, 15 SKUs split into classics and specials. The classics are what you know as your flat whites, your cappuccinos, and your black coffee. And then the specials are a more innovative rotating menu.

But also coffee-based or other foods?

Coffee and matcha.

And it's only beverages, no food?

Only beverages plus small selection of pastries. We have almost 30% of 30 to 40% of our orders with food attachment.

What type of food is that?

A croissant, pain au chocolat, a pistachio croissant, and so on. And we try to bring in, you know, more products over time. But essentially what we focus on is the beverage selection.

And I mean, the promise sounds very simple. good coffee at a much lower cost than elsewhere. I mean, the prices for coffee have gone up and up and up. And I mean, I notice if I go to a Starbucks or elsewhere, you pay almost €10 for like €8, €9 for coffee. So attacking this model and serving good product for a lot less seems very obvious in the end.

Yes, but also challenging, right? Because the price is the output of the process. So you really have to refine every step of the process. Every line item in your store P&L needs to be very carefully controlled in order for you to be able to offer that price profitably. Now, of course, the price you are talking about, which is now, you know, became very popular in Germany, is the €2.50 cappuccino. Not all the products are priced at €2.50. We have products at €5 and we have products at €2.50. And then the percentage of specials that we sell on our menu are often, you know, reaching 30 to 40%. So these functional drinks, the protein matcha or the strawberry matcha cloud, are extremely popular. And that's another reason why customers come to us, because we're not a traditional coffee shop business, right? We're modeled as a modern coffee shop, basically similar to what you find in London, what you find in New York, and what you find in other parts of the world.

In Germany, like, who's your competitor? Who are you going up against? Against Starbucks or McDonald's or Who do you look at?

So we look at the bigger players, of course. If you think about what the market looks like in Germany today, right? So you have on one side low quality but affordable coffee, and then you have on the other hand higher quality, but what became very expensive, as you said. We're building the middle, right? We want to be able to offer customers the highest quality possible at an affordable price. So Everyday coffee can again become a ritual, and also so we can attract a market that today is not consuming coffee outside of home. That is ultimately the lowest hanging fruit for us—is getting people back on the street to be able to afford coffee again. And this is not only encouraging for us; it also supports everyone around us in the neighborhood. And we've seen that happen. The people that come to lab to get a coffee will go to the store next door, buy ceramics or buy vinyls, and this helps with the circulation of the economy and also. makes the neighborhood alive. And ultimately what we want to go after, our aim is to basically become the local player, the local German player today that reaches the scale of Starbucks in Germany, which has 180 stores. Now, we don't have a plan.

Starbucks has 180?

Starbucks has 180.

And you're at how many now? 40?

25.

25. End of the year? 26. How many do you have?

The goal is to get to 60 stores by end of 2026. And the focus is basically to have very stable expansion, profitable expansion in the cities that we are in today, which are Berlin, Munich, and Hamburg, and expand into 3 more cities, Frankfurt, Cologne, and Düsseldorf.

And how long did it take you to figure out the business model and the economics? In this very first store, how long were you like operationally in that store until you knew now it works?

14 months.

14 months?

Yeah. So over a year you were basically running one coffee shop until perfection.

Yeah. And we hit every snag you can think of, from the doors falling down to the machines breaking to us messing up the drinks to having myself and my co-founder being behind the bar extremely stressed because we couldn't cope with the demand that we had. So some days were amazing and perfect, and other days were a disaster. And it takes a really long time because we were refining this formula day in and day out, not only the menu itself and what we wanted to create, but also how to make these products viral online, how to get people in the line waiting for us, right? How do we explain what Life Among People is all about? So it took a lot of effort to nail the quality of the product, to find the right suppliers, to Figure out which machines we wanted to use, and to ultimately get enough demand for us to think about opening a second store. And the second store also happened by chance. It was basically a small kiosk in a train station, in an S-Bahn basically, under a bridge in Berlin. What station? Schönhauser Allee. Okay, okay.

So up the street basically from Röntgenplatz.

Exactly, yeah, more or less. And it was a shoebox. It was a shoe repair window. And, you know, I had, as I mentioned, spent quite a bit of time in different places. And one thing that marked me from Japan, from Tokyo, was that you would go into train stations and find these amazing concepts with incredibly high-quality products and food and so on. And people would kill to get a reservation in those locations. And I thought, you know what, maybe this could be something unique where you turn—

A concept.

a strange location into a cool coffee shop, and let's see if it works. It was really affordable, extremely low rent, very good deal. So we said, let's give it a try. But everything we did, you know, up until today has been a gamble. It took us a really long time to figure out, for example, how to get that second store.

How long is the leases that you sign? I mean, if you like take on one of these stores, for how long are you committed?

It depends. So now our appetite is obviously much bigger, and we want the longest lease possible. In the early days, it was 3, Years, we were aiming for 3 years and, you know, sometimes—

And now you're taking on like longer than 3 years?

Yeah, 5 plus. That's our goal. Especially if we're very confident about the location, especially if we like the landlord. And we're very selective right now. So we've perfected this formula and obviously it's always a work in progress, but we're always perfecting the formula of expansion.

What's the most important ingredients for this choice of a location?

Yeah, there's a couple of different criteria. So one is, well, the location itself, right? Is it a mixed-use location? Is it a kiosk in a train station? Is it in a neighborhood? And so on. Getting a very good understanding whether there's a product or a customer product fit in that location. So who are the customers there? What's the demographic like? What's the split between male and female? You know, what is the population size? And basically the dynamics of the area, right?

Would you precise around that store?

Around that zip code, yes, around that location.

So how many meters or kilometers do you count as relevant?

Well, ideally in that spot within 300 meters to a kilometer is what we take into account. So the closest to the store is more relevant, but we look for a range of around 1 kilometer to understand the area, but we look for schools, universities, retail shops and how basically developed the area is. It sounds very reasonable.

Clinics. Anything surprising where you found out, look, it has to have like, I don't know, a highway exit or it has something crazy that you found out in the data? I mean, like university or schools seems very like, I would think of that.

Yeah. So I think the traffic is most important, i.e., how many people walk in front of that store every single day, because it makes your job to attract those customers easier. So naturally, this is what we care most about, but not all traffic is relevant. So looking at the younger audience, for example, students are very relevant for us. We're a grab-and-go coffee chain tailored for the modern consumer. So most of our customers today, not exclusively, but a big chunk of our customers today are people on the go, right, that work, in different places, go to gyms in different places.

You have to look at Hamburg Dammtorbahnhof. You were aware of that train station?

Yeah.

It's across the street from the university here.

Yeah.

And everything's empty there. It's dying there.

Yeah.

It is crazy. The middle of Hamburg. I mean, that sounds, from what you say, it sounds exactly like your location.

So you have to be careful with these. So you don't want to be the only coffee shop there. You don't want to be the only retailer there or the F&B option there. You want to go where there's already some density and some availability of options. Because that creates basically more traffic. Nevertheless, this is how we look for locations. And today, for example, transit hubs, think train stations, are a much bigger part of our expansion plan.

Uh-huh.

Because we understand that if our customer lives in area X and is commuting to area Y, they are going to take that train. And we can basically either, by seeing our brand, immediately create this brand connection, because they see the logo in the train station or they grab their coffee on the way to work and on the way back. So we want to be where customers need us at the end of the day. And this is, we always talk, myself and the team, we talk about the 3 A's. It's availability, affordability, and accessibility. And availability is always being where the customers need us, right? So really understanding who's our customer audience. And today it could be the policeman, And it's a DHL driver that we see in the store every morning, but it's also a business model tailored for people on the move.

And how much revenue does one store have to make for you to make it reasonable?

Yeah, so the way we've modeled our business case is on average, so we said a store is roughly 50 square meters, costs us $50K to develop a store versus a Starbucks. which is 150 square meters and costs €450K.

So for €50,000, you can build a store?

Yeah. There's additional ancillary costs that come above and beyond, for example, some real estate fees or agent fees. But the actual cost of the store itself, we have perfected the model that is as close as possible to €50K per store, which makes our payback superior to industry standards. And this is what we need to maintain. And this is one of our primary goals. is as we grow as a business and as we add more stores in the portfolio to stay within these guardrails, because that's what makes our business very interesting.

So, but again, the revenue is important. I mean, you look at payback, obviously you invest the $50,000 and then how fast do they come back?

Yeah, so payback time for us is 7 to 9 months depending on the store and the location and the time you launch it of the year, because this is a seasonal business. So in winter, slower than summer. So if you launch a store in summer, you pay it back much, much faster than 7 to 10 months.

So let's say half a year, you have payback.

Yeah, half a year.

That means then that if you have like, if you get $50,000 paid back in half a year in like fully operational mode, like one store can produce like $100,000 in cash or in EBIT in a year.

A good performing store, yes. So the way we've designed our business model, our business case is on average, we want to aim For 400k per store per year.

So if you have like 40 stores, for let's say for end of the year you have 60. Yeah. So that gives you like an EBIT. I mean, you have overhead costs obviously and everything. So it's not EBIT, but it's like gross margin maybe of then six million. Ab und zu werde ich gefragt, wie denn unsere Homeoffice oder Präsenz Policy sei.

Wir haben de facto bei OMR keine ganz einheitliche Policy für alle, aber jeder weiß, ich bin ganz Großer Fan von Präsenzoffice. Und wir haben verschiedene Nespresso-Maschinen im Büro natürlich. Und ich bin wirklich überzeugt, Menschen kommen ins Büro, wenn es einem hier gut geht. Und dazu trägt Nespresso bei. Es gibt immer wieder Gesprächsstoff an der Kaffeemaschine, vielleicht auch demnächst über den Kaffee selber. Es wird nämlich eine B2B Limited Edition geben von Pumpkin Spice, also Nespresso und dann die Sorte Pumpkin Spice, passend zum Herbst, zu Halloween. Wer die ganzen Vorzüge von Nespresso erleben möchte, Der muss gar nicht unbedingt extra zu uns ins Büro kommen, sondern kann das auch in seinem eigenen Unternehmen erleben. Einfach die Vielfalt von Nespresso, Milchkaffee, Flavoured Coffee, Eiskaffee. Alles könnt ihr auch haben. Ihr könnt Nespresso-Kaffee unverbindlich in eurem Unternehmen testen. Ihr bekommt für 3 Monate eine Nespresso Pro Maschine kostenfrei ausgeliehen und müsst nur euren Wunschkaffee dazukaufen. Zum Start gibt es außerdem kostenfrei eine Kaffee-Masterclass. Habe ich auch sehr genossen. Man kann da vor allen Dingen seine Lieblingskaffees entdecken und direkt bestellen. Das Ganze kann man ganz einfach starten bei uns über den Link in unseren Shownotes und die Kollegen und Kolleginnen von Nespresso melden sich direkt bei euch.

Depending on the ramp-up phase of the stores, when you launch the stores and so on, but off the bat, if you do the math that way, then yes. And our aim is to get 15 to 20% contribution margin out of that store. So if we can control today, as I mentioned, the guardrails, If we can have a maximum rent and store cost of 10% and a maximum labor profile of 20% to 25% per store, we're able to get to 15%, 20% contribution margin per store. And that's what enables us, again, the price is the output of the process. So that's why we're very focused on the process and very focused on the discipline of running those stores, because this is what makes us successful down the line.

And I mean, you must have like then probably by now, 100,000 of customers so far, probably?

More. We have actually 100,000 plus on our loyalty, and 55% of total transactions have a loyalty attached to them.

So you bought a loyalty system already that has like over 100,000 names in it, okay.

Yeah, from early days. These are active customers that come again and again. We have 60% of our loyalty customers come at least once a week.

And how much do you spend on marketing in your model?

We don't. So our marketing is completely word of mouth. It's completely organic. We do everything in-house. And our brand marketing today is focused on what we call the 3 Ps, which is people, product, and places. So we communicate our locations, we communicate our menu, and we create content around the people behind it. And this is what drives this content engine.

How many people follow you on Instagram?

We have over 30,000.

Not massive, but okay.

Yeah, I think again, for a company our size, gradual growth both on TikTok and on Instagram has been one of our targets that we track. And shout out to the team. It's very committed to building this great relationship with our customers, and we continue growing our audience as we scale the business.

But zero paid marketing.

zero paid marketing. So we don't have paid influencers. We don't basically do any customer acquisitions or performance marketing, and everything that we do is organic. And this is one of the reasons why we have this activation playbook and this community side of the business, because we don't need—

Events and all these things.

Yeah, and we don't need to spend on customer acquisition because we're basically creating this relationship with our audience in the locations that we have. And, you know, creating this kind of loyal relationship without the need of spending on marketing budget.

Is it, can you already tell a difference between like a barista that is like a very social person and very like, how do you say that, approachable and somebody that is not?

Yes, in the interview process, I guess you mean.

Yeah, also like in the revenue. I mean, do like certain baristas are able to sell more than others?

So I think it's a people business and people will be different. You'll have very different relationships. I think what we try to strive for the most, and it's one of our values, is unreasonable hospitality. And to be able to provide the best customer service, we want to smile, we want to ask the customers how's their day going, and we want to say bye and thank you. And I think these are the basics that you cover. There are some baristas, some store managers, some, you know, staff that is more friendly and can build a relationship faster. And I think that comes over time. And you certainly see it in the performance. You get more loyal customers that come back because you have this friendly engagement with the staff. But I think at the end of the day, what's really important is to provide this minimum level of customer service that is essential for us to make a customer happy. Because you can make or break the day of someone. And I think the power that you have as a barista, you underestimate. You have, you know, 400, 500 customers that come into your store every day, and they can leave very happy, or you can pretty much mess up their day. You can fix a bad coffee with a smile, but you know, you can't fix— you can't fix—

yeah. Okay. You must have noticed that in the German bubble, not so much in the startup bubble, but in the let's say intellectual bubble, city dwellers bubble, whatever, Lab has come under scrutiny and there's people discussing if that is a good thing. And there's even, I think, some left-wing activists attacking your stores. Why is that? What's happening there?

Yeah, I mean, I asked that question to a lot of people and I think very few can explain it. I think from my perspective, Lap is such a big part of the subculture today, and in such a fast time, we became such a big part of the ecosystem and of the cities that we're in. We're such a loved brand that by definition, you know, a lot of love brings also some criticism and some scrutiny.

What are they criticizing? What are they essentially telling you that that is not right?

Yeah, so I think early on, there's been a lot of misconception. So we've been treated as like this foreign company because we had At one point, even after it took us 2 years to actually raise from investors, after getting rejected by banks, after really working extremely hard to get the business to a stage where it's investable, we ultimately had to bring in VC capital. And I think there is this stigma in Germany for some reason. I'm not from here. Maybe you're a bit more familiar with that. There's a stigma around raising money and investment. And I think this is kind of what started that debate as to why local coffee shop business is raising from investors. And I mean, at the end of the day, we're a local team of 30 people, 140 in total with baristas.

But I mean, there's a lot of things that are exactly extremely desirable for Germany. I mean, like somebody like you coming here, building this, creating jobs, creating a potentially international brand out of Germany. That is exactly what we need. And plus, that's the one thing, that's the macro thing. But I was surprised about this backlash because if you look at it, you're basically reducing consumer prices. I mean, you're making coffee cheaper. So I was insecure, or maybe I wasn't aware, what is the problem exactly? I mean, decreasing prices is something that is like a socialist idea.

For us, I mean, this is one part of the values of the business is to offer the best deal possible to customers. And if you think about it, this is exactly what German values are, efficiency and affordability, right? If you think about the big businesses in Germany today, think Lidl, right? This is a business built on German values. German consumers are not consumers that have the appetite to spend like in the US, right? So it's a much more economical society here. And we wanted to model it to provide the best value possible to customers in the cities that we are in. And somehow there is this notion that because we raised capital, we will monopolize the coffee market and take over and then all the other players will suffer.

Oh, so you were attacking those, the mom-and-pop stores, like the traditional family-owned businesses, you were like sort of like making life hard on them.

Well, in reality, you can ask, and I did ask every single journalist and, you know, we did our best to reach out and to understand from those that criticized us, what really the issue. And I asked if they can name one coffee shop that shut down in the last 3 years since Lab has opened, and no one could even name one.

But you take it as there is no such thing as bad PR, or like all these, I mean, in the end, like Lab Coffee is like now a very known brand because of all the, let's say, distraction around the core story. So in the end, you could argue, whatever, there's no such thing as bad PR.

So, I mean, obviously this has been a very interesting turn of events because obviously now everyone in Germany knows what Lab Coffee is and we still consider ourselves a small business. We've had the amount of visibility that we get today is, you know, what bigger brands dream about. I think—

The vandalism, did the vandalism like really cause you problems or was it just insurance issues that you could fix in a day?

No, I think it's not insurance, it's not police, it's not what happened. I think the most important thing when something like that happens is to show up for your team and be there with them. And I was very impressed and really big shout out to everyone on my team, both in the stores and in the headquarters, the way they showed up, the way they cleaned the storefronts, even neighbors.

How many times did that happen? I mean, how many stores did get vandalized?

For a while, it was happening repeatedly, right? And we were not discussing it. We were not talking about it. We were just basically dealing with it without making a big fuss. Obviously, it is very surprising for me to see that happening, you know, in Germany per se. But the bigger problem happened when all stores in Berlin were attacked on the same day. I think this was quite damaging for us for a short period of time. You know, as a team, we were quite affected because Like I said, building a business, creating a product that people want, and we touch thousands and thousands of people with our cups today. There's a lot of people that love Lap and come to the store and have a great relationship with the baristas. I'd like to think we have a very positive impact on the society that we're in today, but nevertheless, you can't deny that this will impact you on a personal level, right?

Right, right.

And it was something that we had to deal with as a team, and we found a way, right? We all stepped up and we all realized that At the end of the day, the world is changing. This is not a story about us. There is no freaking way that you can monopolize the coffee market. There's 11,000 coffee shops in Germany. There's 2,500 in Berlin. It would take us, I did the math, it would take us 450 years to basically monopolize coffee in Germany. You're not Microsoft in the '90s. And these misconceptions and lack of education and all these— random ideas that are being thrown out there.

Was it like Berlin-based or were there also stores elsewhere that were attacked?

Mostly Berlin-based.

And you have an idea who's behind that?

No, and frankly, it's not important.

Did it phase out a little bit already or is it still happening?

No, I think from that perspective, it's not happening. I think, I hope everyone realizes that this is very counterproductive. And because at the end of the day, this is not going to prevent us from doing what we want to do, which is build a national brand, right? A household name in Germany. We love the business that we're building. We love the customers that we have. We're a very collaborative, happy team. We're very motivated. We have a mission that we're pursuing. And in the process, right, we want to build a consumer brand that everyone is proud of.

And how do you get investors excited? I mean, like, in order to move forward and open 20, 30 new stores this year alone, what's the story that you're telling investors? I mean, is it like, look, I want to have like 500 coffee stores at some point, and I'm building an international— I'm building the the modern Starbucks? Or what's the vision?

Yeah. So I mean, there's a combination of different things that get investors excited today. I think for us, fundraising is not a goal, right? The capital that we raise is simply what we need in order to get to our next milestone and the next milestone and so on. Because we're not building a B2B SaaS business, we actually want to raise as less capital as possible to make the business more successful. But so On one side, there's a big potential in the market today that is completely untapped. If you look at McCafé, it has over 1,000 locations in Germany.

McCafé, that's McDonald's?

Yeah. Starbucks has 180 stores in Germany. And also today, these are brands that, you know, despite being successful and despite taking a lot of learnings from what they've built, they've lost touch with the local culture, right?

I recently read an article how Starbucks is trying to become more cozy, cozier again. Being cozy is not what you aim to be.

But also we don't aim to be not cozy. What we do is basically we work with the parameters that enable our business model. So instead of having a large store with a lot of seating, we limit the number of seating to 10 to 12, basically. So we enable people to stay for a short stay. They can still be cozy, right? They can still have a cozy time, but nevertheless, it's not the location where you sit with your laptop for hours and hours and work alone.

I mean, that's also a bad business model. If you have people like sitting there and drinking one coffee and sitting there for hours, that just doesn't like pay the rent.

And this is one of the reasons why Starbucks today is revamping their business model and changing.

But they wanted it more cozy. I was surprised. I mean, that attracts even more people to just sit around.

They're actually going smaller and smaller in terms of locations. And they're going into suburban areas to offer these kiosk models where it's much lower cost to operate, but you still get the traffic and the footfall.

Okay, so in the end, you are at a place that Starbucks maybe wants to come to.

Which is a hard transition for them because they're going from big locations, third place, Wi-Fi and people sitting there. But we want to be the local business that is basically able to build the alternative for what consumers need today, modeled to the world that we live in now, right? So on the go, high quality, affordable, always accessible, and also a brand that people connect with. So on one side, this is obviously the potential that we have in the market today, but the brick-and-mortar business is only a step into what we can do from a brand perspective, right? The reason why we focus so much on building a brand that resonates with people is because Not only we want to offer affordable coffee to customers at our stores, as I said, only 1 out of 10 coffees are consumed out of home today. So we see a big possibility, not only in expanding geographically with more stores and generating free cash flow to make the business bigger, we also see a possibility of innovating on the products that we are selling today. Imagine our most successful drinks, say strawberry matcha cloud, you can put it in a can and sell it in a supermarket. We can put our beans in retail stores. We can get our products to people at home. So there's a possibility of expanding the revenue channels that we have today beyond brick and mortar. In addition to that, one of the biggest problems of F&B, of offline brick and mortar today, is that you don't know your customer, right? I worked in the banking industry. This is the first thing you do is KYC. You know who your customer is. Today, very few players in the market besides you know, Beets and Roots or Burger King that have digitized the way you order know exactly who the customer is. And that's what we've done with our loyalty program. We've been able to understand what our cohorts look like, understand the frequency of loyal customers, understand the revenue that we generate per person, per customer, what is the net profit per year, and how can we basically increase that. And we do it in a very friendly way, right? So we're very relationship-driven. We would go to you, Philip, and ask you, what do you like? What do you not like? Give us your feedback about certain products. What would you like to see? Where do you want us to open next? And by building this relationship with the customers today, we're able to build a very strong base of customers that stays with us long-term. And those customers will not only purchase a coffee from, or a matcha from the store, they will eventually buy our products in supermarkets and yeah.

Okay, so that could be supermarkets, it could be additional products, What else can it be?

So in the coming months, we're also working on launching a revamped loyalty program and a mobile app, which facilitates basically checkout times, allows for pre-ordering, enables you to get even more loyalty and rewards down the line. And through that app today, we can innovate on the model, right? So today we're purely, I would say the majority of the business is purely offline. We have a small share of online orders and we have a very successful loyalty product. And we can develop that down the line. Subscription could be also one of the features of the mobile app and then innovating on the loyalty down the line.

Okay. Okay. And in those 20, what is it, 25 new, 35 new locations this year, you're like, I mean, that's still, I mean, we talk about that as if that's already happened. I mean, it's like January and you want to open 35 new locations. That means almost like one a week. So you're traveling the country and signing leases. How do we— what, looking at places?

Exactly. And last year we opened 19 stores, so one store every 19 days. And our hope now is that with the process that we have in place, with the great team that we have in place, we're able to do a bit more than that per month and reach our goals. But we don't reach our goals at any cost possible, right? I think we need to be very focused on unit economics and profitability and only go with the locations where we're convinced That one, we have demand, that customers need us and want us, and also it's locations that—

But do those locations exist? I mean, are they, is that possible? I mean, do you need like free spaces in those neighborhoods? Do they, I mean, is that a buyer's market right now? Or a renter's market?

So definitely those places exist. I think it's not a no-brainer to find them. Especially if you're very specific about what you're looking for, but you always find locations, yes.

Okay, and then the next step could be train stations and working with Deutsche Bahn and that?

We're launching our first train station pop-up in Munich in the coming weeks, and we're very excited about that, and we're going into train stations and hubs and hopefully airports sometime this year. So this is a much bigger part of the scaling plan. So airports as well? We don't have yet location, but we're working very hard on that. And that's our goal ultimately is to also be in train stations and airports.

I did a podcast recently with David Baumgartner, who founded Dean and David. And he told me how difficult it is to convince the Deutsche Bahn to give you the first store in a train station because that is like—

You have to prove your case, right? Because they have so much demand for those locations that they basically start with a pop-up setup. If the brand does well, if it's popular, if the working relationship is good, then you extend the leases from there. So we're, you know, first step in working towards that. And I'm confident that this will be a successful model down the line.

But that does not necessarily mean downtown areas. I mean, you're looking at close to universities, train stations, transition points, but I mean, not so much the inner city situations.

Well, it depends on, again, once more on the locations. So We have 2, we've basically streamlined our expansion plan into 2 store types, tier 1 and tier 2, which basically are mixed-use locations and kiosks and train station hubs. So these mixed-use locations is what we described earlier, which is a hub where you have clinics, universities, retail stores, large demographic and population size. And high traffic. And those locations, depending on the size of the store, fall into different buckets.

Okay. I mean, in the end, if I like say a little sharp here, would you reject when I say it's like an address generation model, a lead generation model, and then for new business to come? I mean, like selling coffee is what gets you, though it's like a marketing place, it's like lead generation, then you're building some type of food on top of that. And then the real business is yet to come.

Like I said, it's a platform. So beyond the formulas and the science behind it and the data that we're discussing today, there is the human element and there's a people element, again, which is why the brand called Life Among People. This year alone, we hosted 250 events, all types of events, from book clubs to running clubs to dog events to—

At the stores?

In the stores, yeah. To parties. We give space to local artists to portray their art and to put their work in the stores. We get nothing in return besides pushing them and promoting them and giving them a chance to basically show what they do. And this is This is going back to the community side of the business. We care about people at the end of the day, and coffee is a connector and also a door opener to many more things, right? If we can go from coffee to matcha, from matcha to functional drinks, and continue developing based on the taste of customers and based on trends in the world, offering more and more innovative products that contribute to our, let's say, success and profitability, then we're building a community that feeds itself at the end of the day.

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Did you ever think about like just doing like five stores, making half a million in contribution margin, being only you and a colleague and the people that work in the stores which are employees and then You live off of, I don't know, $300,000 in earnings or in EBIT in a year, plus your salary, and that's a good life?

Yeah, I mean, as you know, a founder salary is extremely low. So that's not the way to basically, let's call it, live a good life. I think it's enough. It's enough depending on your ambitions. And I think it would still motivate me to build the app, even if I have less stores. I think the reason why we decided to go bigger is because we had so much demand. Today, we receive DMs on social media, we receive emails, and I still do customer service. So, if you're wondering, if you ever send an email, I will read it and I will reply personally to you. And I read every single email, and I can't tell you, Philipp, I can't explain to you the number of emails that we get from not only Germany, from neighboring countries and different parts of the world. So, there's a lot of demand for the brand, and if you have that opportunity, right, you take it, and that's what we're doing at the moment.

Okay, and international expansion could also be on the roadmap?

At the moment, the focus is on Germany. We want to stay very focused and very disciplined. I wouldn't say that we're not considering or looking into neighboring markets. Adjacent countries, you know, think Austria, think Switzerland, have a lot of potential, but today that's not on the roadmap.

And are you looking for investors right now? Can you like finance the next expansion phase through your Cash flows?

We're able to finance the next expansion phase. We're not looking for investors right now, but at some point, if we continue opening stores, which is the majority of our expenses, we would need to raise more capital down the line.

And how much capital did you get so far?

I mean, without going into too much detail, we raised enough in order to open those stores.

That sounds like $2 or $3 million, not like $50 million.

It's a couple of million.

It's not like ultimately today with all the AI stuff we're used to like millions and billions in investments. That's not your case.

No, and this is also not healthy for our business model, right? So we want, our goal is not to fundraise. It's to raise as much capital as we need to get to the next milestone. And this is how we go about it down the line.

What's your perception of Coffee Fellows? I had the guy, the Coffee Fellows founder also, Stefan Tewes, also on the podcast, I think 2 years ago.

Yeah.

And I thought like with him, and I mean, I had no idea that this market opportunity existed until you came. I had all these people on the podcast looking at Starbucks, looking at McDonald's and McCafé, and then I was like, okay, there's no way somebody can build a new coffee chain. What are they doing wrong? What are they not seeing?

They're not doing anything wrong. I think it's a great business. It's an extremely healthy business. They have around 320 locations, if I'm not mistaken, and I hope I'm not saying the wrong numbers, but around $120 million revenue. It's a slightly different model because they target gas stations and it's mostly franchise business. We own most of the stores and we operate most of our stores ourselves. So the way we approach the business, like I said, is from a brand perspective, very different than your typical coffee shop today. It doesn't mean that they're doing anything wrong. I think with the locations that they have, with the business that they've built, they did everything right. And that's why they're a success in Germany today. And they're not the only ones, but The market is so massive that there's room for verticalization in the coffee industry today.

And is the market price sensitive? I mean, obviously it is, otherwise you wouldn't be there, but it must be.

I believe the way we're heading, not only in the coffee space, but in general in the consumer space, right? With everything becoming much more expensive, everyday products matter so much more and they need to be affordable. Because on one side, low quality no longer meets the expectation of today's consumer, and very expensive products are a luxury that only tackle a very small niche of the market. So it's the middle that will grow, right? And everything else will erode. So you're only successful if you're able to build a high-quality, affordable product, or you offer an extremely premium product with a very fancy experience.

Maybe the coffee procurement market itself. I mean, I don't know much about coffee procurement, but it seems like you're basically, your raw materials, they're not just there. I mean, you have to buy coffee somewhere.

Right.

Prices vary, go up and down.

Correct.

I mean, how does that affect your business? I mean, is coffee like a good business model in the future with all the climate change going on? Situation in Africa, in the regions where it's produced, changing. Is that something that you can completely take for granted?

No, definitely something you have to take very seriously. And despite coffee having extremely high margins, there's still a lot of fluctuation in the prices of coffee. It's a commodity. There's a lot of impact based on climate, based on other variables today, but you can still control the prices that you get. One, by purchasing volume ahead of time, right? So having a really good relationship with your supplier, with your procurement supplier. In this case, it's our local roastery and our local coffee partner. Buying in volume in advance because economies of scale help stabilize the price, you can control your margins for an extended period of time. Now, obviously, we can't control the weather. We can't control disasters. But you can definitely control the prices of commodities if you know how to approach it.

But also, isn't there like EU regulation going on? I read that somewhere. Let me see. Deforestation regulation, stuff like that, where like all of a sudden you get like new variables in your business?

Import taxes, right? So for example, that's one of the variables that could happen. At the moment, all of these are stable today. They don't impact our based pricing, and we've baked that into the model. So we have headroom and we have headway in terms of flexibility of pricing.

But you purchase the same quality of product or input factor as a Starbucks does or as a Nespresso does, as the market leaders do?

Well, I hope better. I'm not sure exactly where Starbucks today— I mean, at their scale, they must have thousands of farms that they work with, but our quality of coffee, as an example, right, is specialty coffee grade. from a family-owned farm in Brazil, extremely high quality. Our matcha is ceremonial from Yame in Japan. So we do have very high quality products.

How did you find them? I mean, did you just like, I mean, when you opened your first store, were you like purchasing from them right away?

So we went to the local roasteries in Berlin. We met with many of them and we decided to go with 19 Grams, who we found to be very professional to work with, was able to offer us competitive prices at extremely high quality. And we continue building on that relationship. So the goal for us is to do vertical integration into coffee, into pastries, into different parts of the business.

So you're not buying from the origin, but you're buying from a Berlin roastery, and they are like procuring—

They're the middleman that procures the green bean and roasts it, but we're effectively buying from the farm. So we know exactly who we're buying from. We know exactly where the product's coming from. We know the specs, and we're very confident with the supply chain that we have.

But it's not like you are going to that farm yourself and like talking to the farmer No, I mean, again, I think people probably have the misconception that LAP is a massive business.

We're still a very small team.

How many people?

We're 140, but 30 in HQ. So the rest are in the store.

Okay. Okay. That's not much.

And over time, you know, we're 3 years old and we're maturing and we're developing and we're getting more stable in our operations. And over time, this is something that we would do for sure.

So, but in the end, you basically picked a roastery, looking around for like the right partner in your supply chain, basically. And then you found this company in Berlin and then you're like, okay, I mean, they must be lucky. I mean, they must be super happy that you came because all of a sudden they have like this major client.

So are we, because, you know, what are we without our suppliers at the end of the day? Every single supplier that we work with are local businesses, whether they're small or big, ultimately they're part of our success.

And without them, we wouldn't be able to do it. But I'm imagining there's this roastery and Somebody's calling like, hey, I'm Ralph, can I come by? And they were like, okay, there's this guy coming. All of a sudden, this guy runs, I don't know, 60 coffee stores and is procuring accordingly. And that is like, you know, a lottery win for the roastery.

To be fair, when we started, we didn't know we're going to have 25 or 60 stores. When we started, we had one and we were, you know, struggling with the one that we had. So again, I think it's great that we were able to find the people that we work with today and the partners that we work with today.

For them, you are the home run, I'm sure.

I hope so, because, you know, we want them to be part of our success if we continue growing and become a national brand.

And did any other coffee brands or retail beverages, food stores already reach out and inquire about your availability as a business and about your plans and everything?

In terms of?

M&A, business development, all these things.

I think it's a bit too early. We're still relatively, you know, young business. Nevertheless, of course, these conversations happen a lot. There's a lot of big strategic groups in Germany in Europe that, you know, whether because they've seen all the news or whether because we have a personal network with them, have reached out and we've had different discussions. But for us, it's not a focus yet. It's really heads down, focusing on operations, focusing on the consumer. How can we make consumers happier, product quality better, and offer a better experience? And I think all these discussions will come down the line.

I mean, they look at the market, they see that you've like now accomplished 25, maybe then in a few months you have 60. So they see the playbook and somebody that can have 60 can also probably have 300. I mean, how much room is in the German market? I mean, how many, like, if you imagine like the market completely served, how many would that be? How many stores?

Plenty. I mean, like I said, Starbucks has 180.

That's not even that many.

You can probably go beyond that.

Can you go to like 300, 400 as with the live coffee model?

With this model, you can, yes.

So yeah, somebody's looking at that and seeing you at the level of execution and plus the economics for every single store, then the math is easy. And then there's high conviction that you're going to execute.

It's still math. So what you need to ensure, like I said, is to be very confident about which location you open and which cities you go to. So you need to have that customer product fit.

But you could have that in basically every university city.

Exactly. You know, what happens next after your tier 1 cities in Germany, the largest in terms of population and so on, you go into more transit hubs, you go into airports, then you go into student cities, then you go into—

That sounds like 1,000 stores to me in the German-speaking region.

I think for us, you also, not to forget, you have neighboring countries that are very similar. The DACH region has a lot of—

Yes, that's what I'm saying, like 1,000+ stores.

I think you really need to get your the groundwork right and the unit economics.

Just be careful not to let me talk you into like 1,000.

We're going to open 1,000 stores.

That would be my headline.

Tomorrow someone's going to quote us in one of the—

Yeah, the business publications here. Yeah, yeah. I mean, but I mean, at least it's thinkable. I mean, it's imaginable, like to have 1,000 stores.

I mean, again, businesses have done it. I think the scale of Luckin is You know, beyond imagination. This is something that I still can't wrap my head around. But I think getting, you know, to a couple hundred stores is something definitely achievable. And that's the start, right? But again, you're managing a large portfolio of brick-and-mortar businesses. You need to have the right structure in place. And we're extremely motivated to go into the digital side of the business and go into Fiji.

But if that was the thought, then the financials already become very attractive for many investors, I'm sure. I mean, that's then all of a sudden you're talking like a triple-digit EBIT, and then that changed a lot of things.

And there's ways how you can also become more attractive by creating your own IP. So our machine supplier today won Coffee Machine of the Year Award. We were also actually nominated, the only German coffee shop, for European Coffee Shop Award. And There's a lot to do on that front, right? So we've built our own machines with our supplier in Aachen. We're trying to innovate on the way the machines operate, how to make it more efficient and easier for our staff in the store to, you know, to make drinks faster, but also to give a lot of attention to the customer. So take some of the work away, try to digitize it, and then put enough attention on the customers to provide the best customer experience. We can also go more into robotics, right? We can have self-serve machines. You know, if you have a big compound and a big complex where you don't have the possibility of opening a coffee shop, we can build our own machines. So it's self-serve and you can preorder from the app similar to an ATM. And then you could get your own drink served directly to you. And there's a lot of ways how that expansion plan and that roadmap can go beyond physical locations on the street. So I think there is a lot to explore as well.

Okay. I mean, that is a different business than others. You have like robots serving there. People will come to the bar.

It doesn't have to look like a robot. It could be a simple ATM that delivers that to you.

Is it difficult right now to get the people to work for you? I mean, is it like personnel?

We had 7,000 applications, barista applications in 2025.

7,000?

Yeah.

For one store?

2 weeks ago, we opened one barista job in Berlin, and we had 400 applications within a week.

One barista means like a barista position?

One barista position. We needed to fill one of the positions.

Is it a full-time job?

So it's basically a limited contract that evolves into a full-time job over time. And we basically are trying to provide— it's one of the key focuses of this year, building the best employer brand possible, building a stellar training program that enables folks to actually continue if they want to build basically a career in F&B. to grow fairly quickly and to professionalize and to get promoted.

Who's applying? Is this like people that are out of a job or students or?

It's a mix. It could be students. It could be people that are temporarily in Germany, need to fill their time. It could be folks that really want to work in the coffee industry that love the brand. We have a lot of those.

Many immigrants?

Definitely some. We have over 24 different nationalities in our stores.

How do you look at Germany now? I mean, you're probably also aware of all the discussions going on, immigration and all these political and social discussions. I'm sure you're too busy to like go into detail, but how do you perceive Germany as an open country? I mean, obviously you like it here, otherwise you, I mean, you have options. What's your take?

I'm a big fan of Germany, right? That's why I'm here. And Germany, as a host country, let's call it, has been quite good to me. I've had my hiccups. I couldn't renew my visa, for example, for almost a year and a half. And I've had some challenges being here. I'm not saying that the system is self-serve. Nevertheless, it is one of the few countries that have taken immigrants from all over the world, that have offered a lot of opportunities. It's a place where you can create opportunities. Here I am sitting in front of you today, right? That didn't come out of nothing. It came through a lot of hard work, but also those opportunities are available today in the market. I would be very sad to see Germany take that away because it adds so much color and flavor to society. And also you want to have all these success stories of immigrants coming to Germany, not to take advantage of the system, but to also create something and add value to— I'm the biggest fan.

I mean, of like your background or Kaan. I like having those careers and having those runs. It's like, I think it's incredible for a country to provide that and to open those routes. It's amazing. And I mean, America is full of those stories. So I think we definitely need more of them. But I mean, there's a lot of people that are like, you know, doubtful of the country and doubtful that it's possible. But I mean, Charles, it's possible.

It's definitely possible. I mean, look, I'm surrounded by some of the brightest people You know, I've ever met, and you've interviewed many of them. Some of them are angel investors in our business that have supported me quite early on when no one would. And these are the people that create this ecosystem, and whether they're German or whether they're from different countries, I think we want to see more of that, and we don't want to be attacked as local businesses trying to create something here. I'd rather have an open dialogue and try to better understand what is it that we can do to make everyone happy if that's possible. But I think going after whether it's VCs, investors, the local ecosystem, this is the future of the country today. If banks are not willing to take risks on immigrants with no history in the country or not willing to take risks on younger companies and so on, that's understandable. But when others step in to support, whether it's private capital or VC investors and so on, I think we should celebrate that and not criticize.

Absolutely. I'm extremely happy to hear that has happened and that you have the story and hopefully Continue to have the story and let's see how big you can develop it. Is it, is the company bankable by now? I mean, could you, can you now go to the bank as well? Or do you—

We are actually about to try again. We tried 3 times and were rejected 3 times.

Actually, banks are still like having the doubts on the business.

I think generally in F&B, because it's an industry with a very high risk of failure, right? It's a very difficult business to run. It's super operational. You know, Market downturns, consumers spend less, and so on. It's understandable to some extent that most banks don't take on risks on FMB businesses and real estate.

I mean, in a way, it's understandable. It's like there hasn't been that many food chains coming out of Germany. I mean, Coffee Fellows was one, then Dean and David is another one that I had here, at least in the podcast. Burgermeister. Burger, you know, burgers, exactly. And then there was this Vapiano thing that had crashed, that didn't work out. And it's still very few. I mean, it seems to be tough. I mean, it looks so easy on the outside, but like just looking at where are the success cases in the past of like in the past 20 years, German food chains really making some noise, there isn't that many.

The consumer market in Germany, I think, could be developed a lot further. You have the population size, you have the income, and you have the purchasing power. And I think we're catching up today to trends from other parts of the world. And you just, you know, need the appetite and the risk capital to do it.

Yeah. Fortunately, there's people like you doing it. Thank you very much for giving us those insights, for sharing a little bit about the story. Yeah, I keep my fingers crossed for you. And hopefully we can like Showcase that journey a little bit and have you on the stage or in the podcast over the next years until maybe, who knows, at some point the Lab Coffee IPO here on the podcast or something.

Fingers crossed. Thanks for having me.

Thank you, Ralph. Bye-bye.

Jede Woche hören hier sehr, sehr viele Menschen zu und wir alle im Team, ich ganz besonders, sind dafür natürlich sehr dankbar. Und jetzt möchten wir euch mal wieder etwas besser kennenlernen. Wer sind eigentlich unsere Hörer? Was beschäftigt unsere Hörer? Welche Themen interessieren euch?

Was können wir noch besser machen?

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