Baltic States – CIS, China, Latvia, Markets and Companies

Commenting the company's experiences abroad, the company representatives say that, for example, in Lithuania the price has always been the principal factor influencing customers' choice, writes LETA.

Sergejs Pusnojs, board member at DC Holding, the owner of Double Coffee, says that Double Coffee cafes are targeted at customers who are ready to pay more for a cup of coffee specifically at Double Coffee, when they may just as well drink coffee at home, whereas customers in Lithuania consider the price to be the most important factor, which is the reason why Double Coffee's performance in Lithuania has not been as good as the company could have wished.

Pusnojs also informs that Double Coffee has left the Estonian market. Often, when starting operations in a Baltic country, companies automatically attempt to expand in all the Baltic countries. However, these three markets are very different.

"We have realized now that there is little point in opening a restaurant in Tallinn, a city with 500,000 residents, if, investing the same amount of money, we could open a branch in St. Petersburg, which has a much larger population and consumption potential. The business will have an entirely different profitability. If we look at new regions then we consider regions where the number of residents exceeds one million," Pusnojs points out.

Chairman of DC Holding board Andrejs Nilovs admits that the company has not attempted entering the Russian market so far because, for example, in Moscow, there are already very many cafes and the variety of choice is vast. "We chose Kiev because our niche there was practically empty. There is no point in spending resources in a market with high competition level when there are other choices. In Ukraine we open cafes ourselves and also sign franchise agreements."

Double Coffee representatives admit that mentalities differ from one country to another, and this affects doing business abroad.

For example, bureaucracy in China is very prevalent and it is also difficult to find suitable employees there. "Bureaucracy in China is so large that it took around six months for our franchise partners, Latvian entrepreneurs, to register a company there. Opening a bank account took 30 days," Pusnojs said.

"In Belarus, in turn, there is one peculiar nuance: all restaurants, even the top-notch ones, must sell Belarus vodka for a certain, fixed price. This vodka costs around LVL 0.50 per 50 milliliters. It is a common situation that, even in a restaurant, in which a million of lats has been invested and highly professional chefs and waiters have been hired, a customer may come and order only a carafe of this Belarusian vodka," the entrepreneurs points out.

The Latvian restaurant chain is also considering entering the market of Turkey, however, so far no contracts have been signed.

The Double Coffee brand belongs to the 2002-founded company DC Holding. Altogether there are over 30 Double Coffee restaurants operating in Latvia, Lithuania, Belarus, Ukraine and China.