Increasing popularity of LAP Coffee chain poses challenges to long-standing local coffeehouses in Germany
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LAP Coffee, a fast-growing startup based in Germany, has opened 13 locations in Berlin in just two years, causing a stir in the city's independent coffee scene. The company's business model, which emphasizes affordability, speed, and automation, is putting pressure on local cafes on pricing and operational fronts.
LAP Coffee's formula centers on small, micro-sized shops with strong branding, offering cappuccinos at a low price of €2.50. This price point is significantly cheaper than many independent cafes, which some local experts argue undermines the perceived value of quality coffee and artisanal barista skills.
The startup's use of automation reduces labor intensity and enables rapid service, prompting established local cafes to rethink and improve their own efficiency and adoption of digital tools to compete. LAP Coffee's cafes are compact with limited seating, contrasting with the traditional indie cafe atmosphere, which often emphasizes community, craftsmanship, and comfort.
Phillip Reichel, a noted figure in Berlin’s independent coffee scene, roasts beans by hand and believes indie cafes need to make their processes more efficient and digital to compete with LAP Coffee. He views LAP Coffee's growth as a "wake-up call" urging local cafes to increase efficiency and better communicate their unique values to justify their pricing.
The company uses digitized ordering systems and fully automated coffee machines, but LAP Coffee insists that affordability does not mean cutting corners in its coffee production. They work with Berlin roaster 19grams, known for its commitment to ethical sourcing.
LAP Coffee's heavyweight investors include HV Capital, Foodlabas, and Insight Partners from the US. The startup's founders aim to create a space where various groups can meet. Branches of LAP Coffee have already opened in Munich, with Hamburg next.
Critics view LAP Coffee's growth as a Silicon Valley-style land grab, displacing many indie cafes. Phillip Reichel believes this growth will displace many indie cafes. However, LAP Coffee aims to attract people who rarely buy coffee out, not replace neighborhood cafes.
Despite the challenges, the rise of LAP Coffee is seen by Phillip Reichel as a wake-up call for indie cafes to better communicate their values and unique offerings to customers. Hand-frothed milk is used in LAP Coffee's drinks, ensuring a quality coffee experience, despite the low prices. The price LAP pays per kilo of coffee remains unclear, but buying large volumes tends to be heavily discounted.
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- Small, micro-sized shops in the fashion-and-beauty and home-and-garden sectors, focusing on affordability and automation, could potentially disrupt the local market by applying the LAP Coffee business model.
- Given that LAP Coffee invests in ethical sourcing from local roasters like 19grams, some stakeholders in the food-and-drink industry might consider partnering with tech-savvy and socially responsible investors, such as HV Capital, Foodlabas, and Insight Partners, to boost their efficiency and digital adoption.
- Business owners in various industries, including lifestyle, finance, and independent cafes, might find it beneficial to collaborate and communicate their unique values more effectively to customers to justify their pricing and maintain their market position in the face of competition from fast-growing startups like LAP Coffee.
