With £2m raised through crowdfunding in less than a week and a deal to launch at transport hubs with SSP signed, it is set to be a significant 12 months for Grind, the artisan coffee house, restaurant and bar group. Mark Wingett talks to co-founder David Abrahamovitch about popularity and what comes next
Do you know anyone who would want 30,000 stickers and flyers promoting our crowdfunding campaign?”
Grind co-founder David Abrahamovitch knows that as problems go, this consequence of reaching and more than doubling the group’s crowdfunding target in six days is not going to elicit a great deal of sympathy.
“It looks like a trip to the recycling will be in order,” he shrugs.
That Abrahamovitch will need to make that journey becomes apparent during our catch-up, as five minutes in he gets themessage that the company has reached the £2m cap on its latest Crowdcube campaign. Within two and a half hours of its launch, the initial target of £750,000 had been reached and exceeded, the £2m cap was reached just five and half days later. At least Abrahamovitch can expect his email box to be less cluttered.
He says: “Every time someone invests, asks a question or requests the financials you get an email, it’s fair to say we had a few emails the morning of the launch and since – £2m was the stretch target, so we modelled a £2m-scenario, we were aware we might not get there. Last time we did £1.3m, so in my mind anything above that was a success. It would have been disappointing two years on if we had raised less than last time.”
Pause button on expansion
During those two years, the company has become one of the fastest growth stories in the capital, going from four to nine sites. In terms of the latest crowdfunding campaign it meant the company had a bigger audience, more social media followers and therefore a bigger reach. It also put a full stop on a period when the business had been making sure it was prepared for further growth.
Abrahamovitch says: “We did seven projects in 12 months up to the end of April. We said after that the first six months of this year we would look at strengthening internally.
“We changed our operations team a little bit; put new systems in; we consolidated our menus; added a new supplier; worked on staff and systems. We worked on the business, instead of in the business. We worked on what we were doing and I am so glad we did that, because of the foundation we have now put in place. You add the £2m we have raised and we are in a good place.
“One of the best things we did was extending London Grind (at London Bridge). That is now a £2m-a-year revenue site. That was one of the best decisions we have made. It was the perfect example of investing in your existing estate rather than taking a punt on a new site.”
Move into transportation hubs
Alongside the announcement of the crowdfunding campaign came the news that the company had agreed a new partnership with SSP to launch Grind café-bars in airports and train stations in the UK & Europe. Grind will launch outlets at two major London travel locations within the next 12 months, with a pipeline of additional locations in both air and rail under discussion.
Abrahamovitch added: “Grind has always been about serving high-quality coffee and cocktails to busy Londoners who demand the best – and we’re incredibly excited to be partnering with SSP to bring Grind into airports and train stations nationally for the first time.”
The fundraising will allow the company to deliver the next phase of its growth, doubling the size of the business to open 10 new Grind restaurants in the next five years, plus at least five café-bars in airports and train stations in the next three years.
The deal with SSP is focused on London, short term, and then medium term, Europe, with Victoria station mooted as one of the first locations for the new partnership.
“We had been working on the SSP deal for six months,” says Abrahamovitch. “The reason it made sense for us, is that we have always had this café-bar model and a restaurant model.
“It gives our café-bar model a home because I don’t believe in the viability of rolling out that model on to the high street.
“It is a very competitive market and the economics don’t stack up, £5 average transaction, the trading spikes you get and the concentration of trading during the week. I see these guys that are cited as our competitors, I see their plans to roll out loads of A1 sites, which are going to do £8,000 to £15,000 a week, and I see it as a hard slog. On top of that all the costs have got more expensive across the board.
“We love the café-bar model and the chaos of it, doing 1,000 coffees a day. But finding sites that can do that level of volume in London is difficult, they are few and far between. Whereas put that model in a train station or airport, and you will do that level all day, every day, seven days a week.
So, therefore, we will have two revenue streams. We are going to take our time to find exceptional 3,000sq ft sites for the restaurant format.
“I don’t want to have to open five to 10 restaurants a year, because finding those sites is difficult, to be forced to do that is not what we are looking at, and we could break the model and the business in doing so.”
Love for London
In terms of the restaurant format, Abrahamovitch says there is still scope to do more in London before the brand looks outside. He says: “We are currently focused in central and east London, which has always been our heartland. We are looking at a few bits, and the places we would like to be are King’s Cross, Brixton, Waterloo, Camden and Canary Wharf. There is no secret to where we want to be. Part of our strategy to over fund was that we know we would have the funds in place to do a quick deal if the right location came up.”
He says that in two to three years, the company will hope to have lots of options. “The benefit of doing the crowdfunding has been that it has reminded me how powerful ‘the crowd’ can be,” he says. “The staff have been reinvigorated, the customers have been excited and it reminds everyone about what we have built. It shines a big spotlight on the business in a really positive way.
“Whether we look at private equity or a listing or we crowdfund again, right now we have a hell of a lot of things to do. The money we have raised doesn’t mean we can sit on our hands for six months, we have to push on from here.”
Time to get back to the daily grind