Dormans coffee shops have been taken over by rival Artcaffe as the chic restaurant seeks a wider presence in Nairobi and Mombasa.
The competition watchdog told the Business Daily that Artcaffe, a coffee and pastries shop, has acquired seven outlets owned by Dormans for an undisclosed amount.
The deal will increase Artcaffe’s outlets to 11 from the current four and gives it a presence in more shopping malls like Yaya Centre, Karen and City Mall in Mombasa where Dormans had shops.
It also offers it a presence in Nairobi’s Central Business District (CBD) and a departure from Artcaffe’s preferred location in shopping malls like the Junction, Galleria, Junction, Village Market and Thika Road Mall.
“We have approved it. The deal involves seven shops,” said Wang’ombe Kariuki, director-general of the Competition Authority of Kenya (CAK). The Business Daily failed to get a comment from both Dormans and Artcaffe on this deal
Dormans’ disposal of its coffee shops signals the firm will now concentrate on coffee processing and export.
The firm, which started operations in Kenya under the C. Dormans brand in 1950, blends and exports local coffee to markets such as the US, Germany, China, Ireland and South Africa.
It is owned by ED&F Man, a London-based firm that trades in agricultural commodities specifically sugar, molasses and coffee.
People with knowledge of the deal say Artcaffe will re-launch the Dormans branch and will officially take over the rival’s operations on February 1.
Coffee shops have been on an expansion and capital raising plans in the race to tap Kenya’s emerging coffee drinking culture and the demand for snacks and meals.
The increased visits to coffee shops are fuelled by Kenya’s expanding middle class with higher disposable incomes to spend on luxury items.
Increased activity in this segment of the market has also coincided with the rise in construction of new malls in Nairobi offering retailers a concentration of well-heeled shoppers.
The boom is attracting well-known brands like South Africa’s Massmart as well as fashion groups Foschini and Edgars — all have booked space at the Sh12.6 billion Garden City Mall, which at 50,000 square-metres will be the region’s largest mall.
On weekends, cars crawl around parking lots at malls in the hope of finding a spot so people can shop, visit food courts and cinemas, or just hang out in swanky cafes hooked to Wi-Fi’s via laptops and tablets.
Artcaffe opened shop in 2009 and is now ranked Kenya’s second largest coffee chain in terms of total outlets behind Java House which has 17. It offers coffee, tea, meals and each unit has an in-house bakery serving croissants and cakes.
The chain previously had four shops located at Galleria, Junction, Village Market and Thika Road Mall.
Artcaffe together with other top coffee shops, Dormans and Java, lost their Westgate shops following the terror attack on the mall in September.
The Dormans deal comes less than two years after US-based private equity firm, Emerging Capital Partners, bought a 90 per cent stake in Nairobi Java House, illustrating investors’ appetite on coffee shops.