The Welsh coffee shop entrepreneur brewing up plans for a new £100m business

He based and constructed what grew to become certainly one of Wales’ most profitable espresso store companies and now entrepreneur James Shapland is again together with his newest enterprise, Coffi Lab.

Mr Shapland, who headed up unbiased espresso store model Espresso#1 earlier than it was offered to SA Mind & Co in 2010 in a multi-million-pound deal, already has 4 Coffi Lab venues buying and selling and is assured that his new enterprise can get to 50 outlets in 5 years’ time, using as much as 700 workers.

Coffi Lab – the Welsh phrase for espresso and Lab a reference to Labradors and its chosen charity, Information Canine UK – noticed its first venue open in Monmouth final yr.

Since then it has added Abergavenny, Marlborough in Wiltshire, and its newest addition, a former NatWest financial institution in Excessive Avenue, Llandaff, Cardiff – simply yards from the place Mr Shapland was educated, the Cathedral College.

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The entrepreneur believes there’s a hole out there for high quality espresso in suburban neighbourhoods of cities and in cities – leaving manufacturers akin to Starbucks, Costa Espresso and Caffe Nero to combat it out in fiercely contested city-centre places.

Coffi Lab, whose outlets open early on Sundays when many independents and cafes are closed, is concentrating on a large demographic, from canine walkers drawn to its dog-friendly coverage, to retirees, schoolchildren and people trying to work remotely.

It lately opened its fifth store, within the Whitchurch space of Cardiff, the place it is usually investing in a bunch HQ with its personal boardroom.

Having arrange Espresso#1 in 2000 with the backing of his dad and investor David Jones, Mr Shapland expanded it to fifteen venues throughout south Wales and the west of England, earlier than SA Mind & Co got here calling a decade later – though it subsequently offered a majority stake within the enterprise to Caffe Nero in 2019.

Coffi Lab

Mr Shapland, chief government of Coffi Lab, stated: “We had achieved an terrible lot and we have been very proud to have constructed it to a spot the place we had acquired an method from Brains. Everybody had seen how Whitbread had acquired Costa and it was a pleasant means for them [Brains] to diversify whereas retaining hospitality and economies of scale. For me it was particular to maintain it in Wales inside a revered heritage and iconic model, which Brains was on the time.

” So I met their executive team and knew they would ‘look after our baby’. They then grew it at a clip and then obviously they exited to Caffe Nero. We had an approach from a private equity house, but again for us it was important to maintain that Welshness.”

Following the deal Mr Shapland was prevented from opening any rival coffee shops for five years within a radius of several hundred miles – a covenant that is not unusual in deals of this nature.

He recalled: “I didn’t think at the time that I would get back into coffee shops again. I just fancied a break so I travelled extensively and did courses in Columbia Business School and Stanford on entrepreneurship. I have always been fascinated by entrepreneurship and wanted to keep my finger on the pulse and meet like-minded individuals.”

Around the time of the Brexit referendum he explored setting up a new sourdough pizza concept, but found himself being lured back into the world of coffee.

He said: “As I came back more regularly I could see these little neighbourhoods in the 10 years I had been away and it didn’t feel as though they had developed in terms of the coffee offer as much as I assumed they would have.

“So, I would walk Pontcanna [Cardiff suburb] and ask myself on a Sunday morning where could you go for a cup of coffee in a large, clean environment, and it really just boiled down to Coffee#1. There were lots of independent operators who would typically close on a Sunday and a Monday. So, I could see the appetite for neighbourhood premium coffee had never been stronger.”

Coffi Lab has been self-funded to date. Mr Shapland said: “They are each generating surplus cash and it is very much my baby. Depending on the scale that we roll out, could we then look to private equity to accelerate that? We will consider that at the time, but at the moment we have control and there is no debt.”

Coffi Lab just isn’t buying the buildings it trades from, however operates below a leasehold mannequin.

Mr Shapland stated:“We were fortunate this time last year to get ahead of the curve with landlords that were being quite pragmatic on the terms they were prepared to offer. So, we managed to get four or five under offer in the depths of lockdown with everyone sitting on their hands with confidence so low.

“The quality of fitouts means we will be spending in excess of £250,000 on each unit. Once they see the model for sites [landlords] they can see how the value of their buildings is going to improve and they get comfort given our track record.”

Coffi Lab

On the expansion trajectory he stated: “The objective is 50 shops in five years. Number five is opening in Whitchurch at the old Cancer Research Wales building later this month. In Cardiff we are also going into Rhiwbina in the old Coral bookmaker building in April or May time. We have got one in Llanishen, which is the old Lloyds Bank. We are also looking at a unit for the summer in Bristol. It feels as though we can do 10 per year.”

It has additionally agreed phrases for a store in Chepstow.

On Coffi Labs’ canine-friendly coverage Mr Shapland stated: “I have two Fox-Red Labradors, Dylan and Bryn. My dad died last year and he was incredibly close to Dylan and we talked in his final days about this concept and if through it we could support a cause that was close to our hearts, which was Guide Dogs.”

Its backing for Information Canine UK contains giving the charity all gross revenues from the primary day of any new store. Thus far this has raised greater than £16,000. It additionally presents hand-made canine biscuits baked completely for Coffi Lab. Earnings from every sale are additionally donated to the charity,

On monetary projections Mr Shapland stated: “At 50 shops you would be looking at revenues of £30m and hoping to push £6m to £7m of Ebitda.

“On that basis, and with that volume, your gross margins can push 75%, depending of course on what happens with VAT as we have been given a bit of cushion at the moment.

“We currently employ 65, but with 50 shops we will be looking at 600 to 700 people.”

As for going additional he added: “I am really enjoying it at the moment, but if you were to extrapolate what we are seeing now from four upwards you would be looking at 100 in 10 years, if I am still hungry and ambitious enough.”

He stated there may be potential for Coffi Lab to diversify by shifting into roasting its personal espresso, in addition to dog-related merchandise. It has a single-origin espresso from El Salvador and transparency in realizing what farmers are being paid per kilo.

Describing himself as agnostic politically, he believes there’s a thriving entrepreneurial neighborhood in south Wales.

He added: “I can say, speaking of my own journey with Coffee#1 and now Coffi Lab, that the work Professor Dylan Jones-Evans has done in promoting entrepreneurship through the Wales Fast Growth 50 initiative and the Start-Up Awards is inspiring.

“I followed the Fast Growth 50 when I was building Coffee#1 and it is lovely to see the level of recognition it provides. As a judge for the Start Up Awards the talent I have been able to meet and the networking is off the charts.

“What Dylan has done in promoting, supporting and cheerleading for Welsh entrepreneurship has been amazing. He has worked his socks off. I lived in Bristol for 10 years when I was growing Coffee#1 and it doesn’t feel like it has the same ecosystem. NatWest are also doing great things for small businesses with their accelerator hub in Cardiff. So, it feels like there is a positive sense of community with everyone willing to support and exchange ideas.”

Mr Shapland stated that in three years’ time he hopes that Coffi Lab could possibly be within the prime 10 of the Wales Quick Progress 50, which ranks the fastest-growing indigenous companies on income development over the earlier two years.

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