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Kenyan coffee shop brands join forces to capture growing consumer market

Kenya’s emerging coffee drinking culture and demand for fine dining is fuelling competition in the market and sending investors on an expansion drive.

Local café-restaurants and bakeries operator Artcaffé and coffee house C Dorman Limited have announced a long-term joint venture project that will see the operators secure their hold on the middle class segment.

The joint venture comes two years after private equity firm Emerging Capital Partners invested in Kenyan coffee shop chain Nairobi Java House, marking the first private equity deal in East Africa’s restaurant industry. The capital was to be used to expand the chain’s operations and the number of locations around Kenya and East Africa.

Artcaffé, an Israeli-owned enterprise, will acquire and manage specific Dormans coffee houses which will continue trading as Dormans. The deal will increase Artcaffé-managed outlets to more than 10 and give it a presence in more shopping malls in capital Nairobi and the coastal city of Mombasa. Both Artcaffé and Dormans are frequented by Kenya’s emerging middle class and the equally expanding expat community.

“This is an exciting opportunity to refresh the Dormans coffee house brand and further raise the customer experience standards while maintaining the great quality coffee Dormans always had,” said Artcaffé managing director Sagi Vaknin.

Expansion

With a growing middle class and more shopping malls under construction in major towns across Kenya, competition in the restaurant industry is likely to heat up.

Artcaffé boss Vaknin and his C Dorman Coffee counterpart Jeremy Block disclosed that plans are at an advanced stage to open parallel outlets at a new commercial complex in Nairobi close to the Westgate shopping mall.

Artcaffé says it will open a 250-seater restaurant but did not disclose the capacity of the Dormans outlet that will be opened at the new The Oval commercial complex.

“This underlines our strong commitment to continue building the economy and providing employment, despite our difficulties and setbacks following the Westgate incident last September. We are still recovering from the losses but are determined to push forward into a greater future, and this project is a significant step towards reaching our goals,” said Vaknin.

Artcaffé was hard hit in the Westgate mall attack where one of its busiest stores was located. According to Vaknin, Artcaffé is seeking to grow its existing human resource base of 500 staff significantly by retaining more than 400 new employees this year following the joint venture with Dormans.

Block is the majority shareholder of C Dormans after purchasing the shares from ED & F Man, a London-based firm that trades in agricultural commodities including sugar, molasses and coffee.

The C Dormans brand was established in 1950. Other than operating a chain of coffee shops, Dormans also blends and exports local coffee to international markets. Artcaffé, on the other hand, is owned by a group of Israeli investors.

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