Tuesday, 5 June 2018

KENYA: Java Group To Expand In Kenya With Addition Of Nairobi And Mombasa Outlets, Spending Sh100m

Java House will spend Sh100 million on opening two new branches in Nairobi and Mombasa in the next three weeks.

Java booked space at Astrol Petrol station on Lenana Road in Nairobi and at Diani Centre Point, formerly Nakumatt building, on the Diani Beach Road in Mombasa.

The Diani Centre Point branch will be the first Java House outlet in Kwale while the Astrol Petrol Station branch will be the 41st in Nairobi.

We will be opening one more branch in Kilimani area at Astrol Petrol Station just along the Lenana Road and at Diani Centre Point in Kwale in the next three weeks, says Nairobi Java House group CEO Paul Smith.

It will take each branch takes up to Sh50 million in order to get it ready and up to the standards we have set.

The Astrol branch in Nairobi will accommodate up to 140 customers at a go while the Diani Centre Point branch will accommodate up to 64 customers.

Java Group, in which an American private equity firm has bought a majority stake, is the biggest restaurant chain in the region with 64 branches.

It is followed by fast-food brand Kentucky Fried Chicken (KFC), Art Caffe restaurant and Subway.

KFC already has 31 branches, nine in Uganda, five in Tanzania and 17 in Kenya.

Art Caffe, on the other hand, has 12 branches in Kenya. America’s fast-food chain Subways has 12 branches, eight in Kenya, three in Tanzania and one in Uganda.

Uganda-based coffee chain Cafe Javas has entered the local market with a new branch in Nairobi, raising competition for Kenya’s restaurant operator Java House.

Cafe Javas’ new outlet, operating under the name CJ’s, is located at the junction of Biashara and Koinange streets.

The firm’s expansion into Kenya raises its rivalry with Java House with which it was embroiled in a trademark war in its Ugandan home market.

Java moved to the Uganda High Court in 2016 after Mandela Group of Companies, which owns Cafe Javas, successfully objected to the registrar of trademarks’ acceptance of the Nairobi Java House name.

The court gave the coffee house a go-ahead to register name as a trademark and to operate its restaurants.

Justice Christopher Izama last year ruled that no evidence had been produced to prove that customers could easily confuse the two restaurant brands.

Cafe Javas has seven branches within Uganda’s capital Kampala and an additional outlet at Victoria Mall in Entebbe.

Java operates 65 branches across East Africa in addition to outlets under Planet Yoghurt and 360 Degrees Pizza brands.

Java House has set aside Sh5 billion in a renewed expansion drive over the next five years.

About 80 per cent of the firm’s expansion drive will focus on opening more outlets in Kenya.

Java Group is the biggest restaurant chain in the region, followed by fast-food brand Kentucky Fried Chicken (KFC), Art Caffe restaurant and Subway.

Artcaffe, which has 12 branches, has been the main competitor for Java House until recently when smaller coffee houses including Kaldis and Connect set up in Kenya.

In February this year, the upmarket coffee chain unveiled Artcaffe Fairtrade Coffee Blend from coffee sourced in Nyeri and Machakos to grow its revenue streams.

The product is available at all its outlets for Sh290 served in a French press while a 250 grammes ground box goes for Sh690.

America fast food chain Subway has 12 branches in the region — eight in Kenya, three in Tanzania and one in Uganda.

Java Group will inject up to Sh1 billion in expansion drive this year cementing its place as the number one restaurant chain in the region.

Chief executive Ken Kuguru said the firm would open new outlets in emerging towns and within major cities in the country to grow its branch count and create new revenue streams.

The firm will also simultaneously explore new markets in the East African region but most of the new investments are expected to be in Kenya.

Java Group is the biggest restaurant chain in the region with 64 branches, followed by fast-food brand Kentucky Fried Chicken (KFC), Art Caffe restaurant and Subway.

The KFC has 31 branches in the region, 17 of them in Kenya, nine in Uganda and five in Tanzania. Art Caffe has 12 branches in Kenya.

America fast food chain Subway has 12 branches in the region — eight in Kenya, three in Tanzania and one in Uganda.

Mr Kuguru says that 80 per cent of the firm’s expansion drive over the next five years will focus on opening more outlets within the Kenyan borders.

The five-year strategy is estimated to cost the firm up to Sh5 billion.

Java Group runs coffee outlets under Java House, owns 360 Degrees Pizza and Planet Yoghurt brand.

The 64 branches under the label include 56 coffee outlets. The firm is looking to open at least two outlets of its brands every month.

Java House will invest between Sh500 million to Sh1 billion in new branches as well as advancements in a state-of-the-art central kitchen and commissary facilities, said Mr Kuguru.

Java Group is keen on Meru and Machakos counties, where it will open its first branches of the year.

The expansion drive indicates a shift to the counties after the devolved governments were established in 2013.


Tourism Observer

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