Kenya’s Café Deli gets Sh100m from South African fund

A Kenyan coffee shop has received a Sh100 million ($1 million) capital injection by a South African venture capital firm to fund its expansion plans.

Café Deli, which was rebranded after a buyout from owners of the Green Corner Restaurant, said it would use the cash injection to take on the bigger restaurant chains in Nairobi’s central business district.

It has plans to open a new outlet on Kenyatta Avenue late next month.

“We want to bring the competition to chains like Java,” owner of the business Obado Obadoh told the Business Daily last week referring to one of Kenya’s fastest growing coffee chains. Mr Obadoh bought out the former Green Corner restaurant.

The funding by Grofin, a South African financing company, will finance the opening of a four restaurants by next year.

GroFin has been funding small and medium businesses with high growth potential across Africa and the Middle East. Established in 2004, it has local teams in 14 offices across 12 countries.

Café Deli started off as a small coffee house in Westlands, a branch that has since been closed, before moving into the city centre. The initial 80-seater branch saw a second larger branch at the iconic Green Corner.

“There was sentimental value for this branch and there is also the central location that allows it to attract clients from the nearby bus stops,” said Mr Obadoh.

The new location is a few blocks up from Nairobi Java House, which has dominated the coffee chains and remained nearly unchallenged after the exit of Dormans from the CBD.

ECP, Emerging Capital Partners (ECP), a private equity owning the Java chain of coffee shops, said there is a preference by customers for coffee shops at petrol stations and locations other than shopping malls, to which Java has responded by opening new branches there.

There has been a shift by consumers due to fears of insecurity, which is informing where and how private equity firms put up their businesses with attractiveness of malls taking a hit with industry players seeking alternative locations including the CBD to set up shop.

Java House last year announced plans to invest between Sh400 million ($4 million) and Sh500 million ($5 million) to open new outlets. Artcaffe acquired Dormans Coffee shop, a move that saw it increase its outlets across Nairobi.

Grofin firm manages seven funds on behalf of 24 international investors, development funders, banks, corporates and foundations with committed capital in excess of $400 million (Sh4 billion).

Other eateries, including Avanti Group of Restaurants, are also fighting for a share of the pie. Avanti, which took over the Books First restaurants, has eight branches across the country and is set to open two more.