Java House: Roasting Their Way To Profits
Interesting video from one of the founders of Java House. He says the business, which includes ten coffee houses, is now a $15 million dollar a year business and they’ve grown that with no borrowing and no money spent on advertising.,
To do that without borrowing is very impressive and it brings me to a point about this whole global economic crisis. All the so-called experts are claiming that part of the problem is that banks are not lending to small businesses and Obama is really trying to get them to start lending, but is that the solution?
Wouldn’t you be better off doing it like the founders of Java House? save and grow organically and then wind up with no debt? (of course we don’t know whether the founder comes from money or not, so assuming he worked and saved isn’t that a better option?)
He doesn’t say whether that $15 million is revenue or net profit and I wonder what their costs are? The labor can’t be that expensive. So, what’s their highest cost? rent?
I wonder if they’ll go public like starbucks did by getting listed on the NSE.
KE,
Being an Accountant…. The first thing any Accountant will ask for is company financial reports …
I’d still like to see the the financial reports to Java House. Instead of relying on the co founders personal testimony… …
Unless I can have these documents… There is no way of confirming or ascertaining the health of this business…
Don’t get me wrong – I kind of see his Idea working… but what is the health of the company ?
Lets work with the reports guys… I’ve seen and heard too many personal testimonies of this kind.. which end up being just a front.
Even Triton was making millions of dollars before the company went Under..
Uchumi made millions but it was going under…
Using other people’s money is not necessarily a bad thing.
If you can be able to borrow at 15% int. rate and make 50% using the borrowed funds then you are way ahead!
Debt is good and bad at the same time. It is the debt management that is really important.
This is a good success-story.
We need to hear more and more success stories out of Kenya.
PS…sort of unfortunate that the MD of Java has been accused of child molestation.
empower kenya:
What? is it the MD in the above video or the other one?
I think one of the founders also owns the nightclub Mercury and I’ve heard some people are boycotting that after they learnt about his perverted behavior.
Why are so many mzungu’s who live in Africa perverted? It’s easier to break the law in Africa and get away with it, especially if you are a mzungu.
Now, I’m wondering about the veracity of that $15 million dollar figure he just laid out.
Why would anyone trust a pervert?
I ceased being a customer the day i learned he took two underage girls to bed simulteneously!!!!!
I made sure many of my friends never go there again….
15M USD poof…….poof…
What happened to his case by the way?
I would not be surprised if he has already paid his way out.
Why are you guys doubting the $15 million dollar figure?
LOL…
1) Many are considering him guilty before the trial is over. Natural justice?
2) There are 2 partners. So I figure the other guy is running the business.
3) For all the problems with the owners, I see Java House being pretty popular. So what if they lose a few customers, there are many more!
4) Doesn’t this stink of racism. A Mzungu is being vilified (hey, if he is guilty… lock him up… and throw away the key) for alleged crimes BUT wasn’t there a Mwafrika cabinet minister who was accused of the same but the accusers were intimidated?
And I think the guy is still in the cabinet!
And we have stories – every week – of some mzee marrying some young girl in the shags.
CT
If you think taking 2 nine year olds children to bed simultaneouesly is justifiable then…….end of story
KE
15* 80=1200 M =1.2B Kes.
Now divide this by 360 days=1.2/360=3.33 M per day
This is 333333 per day per one outlet (there 10 to begin with)
Assume it serves 500 customers(which it NEVER reaches) ……That would mean a customer pays an avarge of 3333.33/5
Which is about 666/= per person
Draw your own conlusion
CT:
Your always defending businesses and foreigners, even in the face of criminality and perversion.
I don’t think anyone has supported Sunkuli and I certainly haven’t. He’s a sick man. So, I’m not quite sure what your point is.
Everything is not just about making money and profits. Would you be comfortable giving your money to an owner who you know is abusing children? And there is an important topic here about Kenya becoming a haven for European child rapists. Now, just because we admonish the Europeans, doesn’t mean we accept the same behavior from the Africans.
I am not going to support a business if I know that one of the owners is a child abuser and I frankly don’t give a damn whether or not they sell good coffee or good deserts.
Anyway, everyone has a right to define their own moral threshold for what they will or will not accept and you are certainly free to define yours.
Lord:
Well, it sounds like the guy is fudging his numbers. They all do. That’s why I’ve remained skeptical about these profit announcing sales reports from all these companies. There’s a lot of hanky panky going down in many accounting departments.
However, let’s look at it from another angle — before Starbucks started going down, their average stores were grossing about $1 million dollars per year, which would not be surprising given how much they charged. You can easily spend $10 a day at Starbucks ($4 for the coffee, plus $3 for a pastry, add in the tax and your up to $10 bucks).
So, this Java guy wants us to believe that his 10 coffee houses are GROSSING more than $1 million dollars a year in Kenya? a country with a 30% inflation rate and where almost 40% or more of the population is living in extreme poverty?
hmmmm….
How much would a typical customer spend at Java?
Some of these businesses are fronts for other illegal activities. They could be used to launder dirty money. And Kenya has allegedly become a money launderer’s haven.
And I am not saying that the alleged pervert is a money launderer.
However, there is statistical evidence that where one is convicted of a certain type of crime, there is a very high likelihood that he is also involved in other types of criminality.
KE & KeIo
Tipycal a guy would spend
Coffee Late 220/=(7 months ago when last there)
Average drinks=180/
Food=350/= (those vegie sncks,cream,pie)
Basically thats what it is…Most guys (i used to go for coffe/tea Only)…75% of chaps take a drink only(coffe/tea/juice)
So just talk of 220/= (plus tips) as the avrage
That talk of 1m USD as PROFITS let alone gross is suspect
KEio
You are right…people talk of huge profits when they are planning to do some ‘CLEANING’
Lord
It is simple – all they need to do is to artifificially raise the turnover and then cook the books and voila! You have clean money!
I understand this has been happening alot especially with the wahindi and wazungu businesses in Kenya and the region at large.
Wanafikiria sisi ni wajinga sana!
KEioYou are right…people talk of huge profits when they are planning to do some ‘CLEANING’
We all know what the huge cleaning involves: Taking your company public at the NSE! — I have a countdown running on when Java house is going to do an IPO. It’s a great way to steal money from an unsuspecting public.
220/ or 180/ for coffee? that’s almost $3 dollars! that’s double the price of what a good cup of coffee costs in America. The typical cost is about $1.60 – $1.70 (even at Starbucks, a regular, small coffee costs $1.73). — but the typical America can easily buy 3 or 4 cups of coffee a day so they’d be spending about $7 dollars a day at the store, which is not much for many Americans (even in a recession).
KE & Others:
Hey, I did not ‘defend’ the jamaa. As I have argued that pedophilia is disgusting & a crime and if the guy is guilty… throw away the key… I have never seen or met the jamaa so I do not care about him.
I am wary of accusations in Kenya. These are often attempts to settle scores.
In the past we have seen how the political establishment would hone in on a business to gain leverage. And if all you folks are so sure the guy is guilty (hasn’t this been going on for over a year) why hasn’t the govt or FIDA done anything about it. As is… fast-track the case!
BTW, did anything ever happen to sunkuli?
As regards the business:
WTF are you arguing about?
Have the owners of Java Hse asked you for a loan? Or to buy shares?
Without the details all the ‘financial’ arguments are stupid.
KeiO: The KRA is very vigilant but the KRA is dominated by kikuyus. Actually the largest non-taxpayers are kikuyu businesses especially matatus, farmers & landlords. These are pure cash businesses. In case of properties, the ‘goodwill’ is in cash.
If the ins & outs of Equity Bank were analyzed for every customer, I bet KRA could increase revenues by 25%.
As for ’supporting’ Java House…
1) I like their coffee though it is pricey so its a treat not a staple.
2) It seems you have already convicted him. Do you have proof or plain hearsay?
3) I patronise multiple establishments without knowing who the owners are & their crimes. Either it is price, quality or service. I also believe in buying Kenyan & Java House was among the first to promote freshly ground KENYAN coffee. Many other establishments would use Nestle’s IMPORTED Instant Coffee (prior to Java).
(I used to go to the original Coffee House for many years but they lost the art of brewing fresh coffee. And no lattes or Mochas)
4) The crowds I see at Java (10 locations) shows that Kenyans – most patrons I have seen at Java are miroos & warias (at least in town) not wazungus – so I am not the odd man out there.
Coldtusker:
Why are you refusing to get the point? We are not saying that you should only patronize businesses where you know the owner. We are saying that once you discover that the owner is a child abuser, would you still continue to patronize that business?
My answer is no. I would not — regardless of how good the product is or how “kenyan” it is. I’m not going to give my money to child rapists.
The guy also owns Mercury nightclub and his sheenanigans with children are known by quite a few people. I also know people who have stopped going to mercury because of that.
I always wondered why those guys chose to relocate to Kenya instead of returning to America. Now, I have my answer.
**BTW
Sunkuli is now Kenya’s ambassador to China. It’s beyond comprehension.
Mercury – No idea. Never been there.
I have no proof he is what you claim he is… anyway, I go to Java coz of the other (not accused of molesting kids) owners…
Like I said, this guy could pass me in the streets & I would not give him one glance… BUT why has the case taken so long if it is an open & shut case?
Unlike sunkuli, he doesn’t have political clout – or morans invading courts!
CT;
Back to the pertinent point of this topic:
Do you think Java house is grossing $15 million dollars a year?
So, let’s assume the average customers is paying $3 for a cup of coffee.
Let’s also assume that they get about 250 customers for each store, per day.
$3 X 250 (customers) = $750 a day
Let’s say there are 260 workdays in a year (excluding weekends)
$750 X 260 (days) = $195,000 dollars a year (for each store)
$195,000 X 10 (the number of stores) = $1,950,000 of total revenue (not gross for ALL 10 stores, per year)
There are two partners. the one on video is the MD.His name is Ashley.The other one is Wagner.Wagner is the one suspected on paedophilia
I dismissed the financial ‘numbers’ ages ago… Unless someone gives me real numbers… forget it.
And if they do… well good for them!
Average (per what is claimed) is $1.5mn per store = Kes 120 mn per year. (I would say GROSS sales not profit)
Thus we have 10mn per month per store (average). Java House sells much more than coffee.
A ‘meal’ (food + drink) at JH runs 500/- at minimum thus… they need to sell a lot of stuff but… that equates to 20,000 meals per month.
Many folks just buy coffee/sodas/drinks. JH also sells quite a bit of packaged coffee (whole beans & ground). So I would dial down the meals to 10,000 per month = 333 per day (JH is open 7 days/week except some holidays. So they are open at least 350 days/year).
All in all… I think JH may be close to $15 mn in GROSS SALES especially with the ‘other’ businesses – sale of coffee beans & meals – they have.
Starbucks sells a lot more than coffee. And a good percentage comes from Starbucks coffee beans. Also… the Frappucino sold in stores.
CT:
The average starbucks grosses about $1 million dollars a year. Do you honestly believe that a coffee shop in kenya can gross the same amount as a starbucks in America?
This is really about gauging the veracity of a financial statement that the CEO of javahouse made on tape. It’s not about lauding his business efforts.
KE: As I said… and enough on this for me… I need more info…
And I said GROSS sales… including all other stuff they do including bulk sales etc…
I have no reason to doubt JH’s numbers BUT I am not investing… and if I were then I would have my Due Diligence…
GO JAVA!!!!! I am delighted that Java is growing from strength and strength, deservedly so!!!! Whether the company is making $ 15 million a year or $ 1 million the fact is THEY ARE VERY SUCCESSFUL based on brand loyalty and quality of service, and if they do not screw themselves, there is no reason they shouldn’t try to become a regional brand like Steers and Nandos and even bigger.
Their success is consistent quality, and I have personally got to the point where I have boycotted their rivals Dormans because they just cannot match their quality. Sasini still pales in comparison so for now they are still the undisputed leaders……my aunts told me about the child molestation thing and frankly I was SUSPICIOUS first about the root of the rumours. Whilst they may be guilty as charged, I am EQUALLY cynical that it could be jealous KENYAN business rivals trying to sabotage their success because frankly it took a MZUNGU to come test out the idea, run with it and make a killing……and typical of jealous, envious Kenyans unable to execute the same vision and creativity. After all Dormans existed before Java as a coffee house and it was a DUMP!
Until I see a rigorous prosecution, I will remain skeptical and a loyal customer!!!!! Aluta continua…..and lets aim for $ 50 m GROSS guys!
Sijui: I will remain skeptical and a loyal customer!!!!! Aluta continua…..and lets aim for $ 50 m GROSS guys!
Where have you been Sijui? You must be very busy running your business.
$50M gross running a coffee shop?
How are they going to do that?
Hi KE!!!
Anyways, yes……been busy, we sold our house right around Christmas and are in the throes of our Arusha/Accra move so a lot of pots on the fire.
Happy New Year!!! I believe it has been that long
When I heard the $ 15 million bandied about, I thought possible
People are forgetting Java also has it’s retail arm whereby they sell ground coffee through Uchumi and Nakumatt so I can see that pulling in $ 1-2 million on its own, then you review its highest grossing locations……two in town in very advantageous spots, both almost always packed……the Yaya and Adams branches also get brisk business and they are only a mile apart……the new Sarit branch is picking up well, even their airport location which is a dump is making a killing……I was just through there on Sunday and was irritated by the fact that travellers on long layovers had virtually camped out there from dawn to dusk so there was zero chance of seating and the place was packed to the rafters. That leaves their Gigiri location, which ironically perhaps gets the least traffic despite being in a very upscale neighborhood.
My take on very rudimentary analysis, Java can easily pull $ 5-10 million gross, if they are hitting $ 15 then wow
All the more reason they should go regional, I don’t see stiff competition from the South Africans for their product and model.
I don’t think they built this business without any borrowing. Key shareholders in the business include Jibril (a front for Gido Moi). I am sure you can fill in the rest of the gaps.