Grind: 'We are an alcohol-led business now'

Crowdfunding has not always had the greatest press, but as far as Grind’s experience goes, it has become an integral part of the group’s story.

Returning to Crowdcube for a third and final raise, few would have doubted the company would come up short given their past success – though even David Abrahamovitch admits he was humbled by the largesse of the reaction to the campaign.

Describing it as a “proper crowdfund”, which saw mostly smaller, and many first-time investors coming on board, Abrahamovitch cites the largest single contribution being £50,000 as testament to its popular reach.

“It’s a nice validation that you’ve got the communication right, the investors like the strategy, and they like what they’ve seen so far,” he says, at the newly opened Liverpool Street Grind.

Starting life as a speciality coffee shop, Grind has long since come to be defined by its evolution and diversity, successfully spanning early morning to late nights, with premium food, drink, coffee and cocktails.

A major part of Grind’s story has been its brand-building, and attention to design, making it a star of social media, having recognised early the potential power of Instagram as a marketing platform.

Abrahamovitch sees this as key to the appeal of the proposition to first-time investors and consumers.

“They come here and think we’re doing a good job. Lots of people have watched the journey, they’ve seen how much we’ve changed, how we’ve built it.

“We do a lot of work on the campaign. We think about the timing quite carefully, and announced it at the same time as three franchises and three of our own.

“I think it gives people certainty about where their money is going. We’re profitable now and there’s not many EIS profitable business. We’ve got a track record of doing what we said we’d do, and that doesn’t always happen in start-up business.

“Fairly consistently we’ve done what we said we would do – I think that gives you a good bit of integrity.”

The campaign allows Grind to fulfil its plan to open two further restaurant-bar locations, in Southbank for a Q4 2019 opening, and Canary Wharf for Q2 2020.

Meanwhile, following a debut franchise with SSP in London Bridge Station, sites in Waterloo Station and Victoria Station which open in the coming months.

Having gone well above the target raise, the extra £1m would give Grind leeway to open another corporate restaurant site – though Abrahamovitch is open-minded about that prospect.

“Broadly speaking if you raise an extra million you can do an extra site, which would be nice because there’s a lot opportunities out there at the moment. But we may choose to wait and see, or invest in existing sites more heavily. We’ve done a lot of reinvestment, and we find we’ve got a really good return on that money

“It’s also nice going into Brexit to have a bit of a cash buffer.”

Building for growth

The last couple of years has seen the group bolstering its people, teams, systems and operations for growth, meaning the head office is primed for a 20-site business rather than its current 11 – a number Abrahamovitch hoped to achieve within 18 months, “or maybe a tiny bit longer”.

The franchising with SSP, which will be under a travel friendly, café-bar format, will allow Grind to test the water outside of London for the first time - and “probably internationally”.

Preparing for franchising has been a learning experience, but has had a positive effect on the wider organisation, forcing it solidify its practices.

“We’ve had to nail so much stuff down,” Abrahamovitch said. “The franchising will only be as successful as how good a job we do of telling them what to do. If we are incredibly detailed about everything – the more controls we put in place, the better it will be, and then those controls come back into our own sites.

“It’s really up to us. With SSP we design them exactly the same as our own. We have the same design, the same music, the same systems, equipment, coffee, milk. It’s a huge amount of control over how they operate. I’m hoping you won’t be able to tell the difference.”

Meanwhile Grind’s corporate stores will be solely under the bar-restaurant format – a strategy it has followed for a few years now, and has seen it relocate or vacate more A1 focussed units.

Indeed, Grind now finds itself as a wet-led business, with alcohol its biggest source of revenue.

“It’s just a much fuller offer. Its increasingly very difficult to do the A1 thing on the high street and make money. In our own stores that our coffee led we find it tough, with a £4 average transaction.

“The more diversified you are, the more dayparts you serve, the better. Some of our stores are 7am till 1am. That’s proper all day.”

“In coffee there’s a lot consolidation going on, he continues. “Department of Coffee have got their strategy and I wish them all the best. All I know is that A1 day only, low average transaction, with only certain dayparts – that’s tough.

“A lot of coffee shops have tried alcohol to limited success – for some it’s worked, for some it hasn’t.

“The key to our success is making it work. We are an alcohol-led business now – more of our revenues come from alcohol than anything else.”