Kenyan coffee chain Java House targets Africa expansion

Posted on : Saturday , 24th October 2015

Kenya's Java House has 36 coffee houses and restaurants and plans to open outlets across Africa in the next five years to capitalise on rising consumer spending, its chief executive said.

Kevin Ashley, who founded Java's first outlet in Nairobi in 1999, said the company would open in Kigali, Dar es Salaam, Lagos, Accra and Lusaka. For now, the firm's only outlets beyond Kenya are in Uganda's capital Kampala.

"We see in five years time we are going to be having a major presence in most of the major urban centers of Africa," he told Reuters at his office over one of his Java outlets, which offer coffees, teas and a menu of international food.

His ambition reflects the confidence of many African and other firms about rising spending power on a continent that boasts several fast-growing economies, even if a commodity price slide has taken some of the shine off the "Africa Rising" theme.

Ashley, who sold 90 percent of the company to Africa-focused Emerging Capital Partners (ECP) for an undisclosed sum in 2012, said there was growing demand for the chain's products, from a cup of coffee worth $1.50 to $10 steaks.

"We can't keep up with the growth of our customer base in Africa so we have enough to keep us busy," he said.

Annual revenue was more than 3 billion shillings ($29 million) in 2014 and is expected to hit 4 billion shillings next year, Ashley said, adding the firm had been funding growth from its own revenue.

With a new store usually costing about 50 million shillings to set up, he said the firm could finance as many as 15 a year but practical considerations limited it to 12. "That is a nice problem to have," Ashley said.

ECP plans to sell its Java stake in 2017. Ashley said all options, including an initial public offering, would be considered.

In Kenya, most coffee shops are in Nairobi, but the chain has outlets in four other towns and plans to start in three more centres within a year.

It has started the Planet Yoghurt brand, an outlet serving frozen yoghurt, and has one pizzeria outlet, called 360 Degrees, but Ashley said it was keeping its focus on coffee.

"We don't want to become the hyena that smells meat in two different corners and then tears himself into two pieces and dies right on the spot because he can't decide which way to go," he said.