Matthew Day in Warsaw -

Coffeeheaven, the largest operator of coffee bars in Central Europe, plans to invest $20m to cement its position as a leading player in the increasingly competitive battle for the wallets of the region's coffee-drinking and sandwich-munching consumer, the company's executive chairman has told bne.

The UK-listed, but Warsaw-based, company, which already operates 67 outlets across the region, intends to up the pace of its expansion programme this year as the company seeks to exploit buoyant economic trends.

"The situation in the last 10 months has changed dramatically," says Richard Worthington, Coffeeheaven's co-founder and executive chairman. "I describe it as the lights going on right across Central Europe. The macro-economic situation has changed so dramatically that we believe there is a very good business case for stepping up the rate of which we grow our business."

Last week, Coffeeheaven said sales in the first quarter of this year rose 60%.

Coffeeheaven's move comes in the wake of mounting interest in Central Europe's coffee-bar market that should herald a gradual transformation of high streets across the region.

Costa Coffee, one of the biggest players on the UK market, opened its first franchised outlet in December in the Polish city of Rzeszow, while the Scandinavian chain Wayne's Coffee has also moved into the market.

In April, the Polish-based restaurant group Amrest, which is the franchisee for the Pizza Hut and KFC brands in Poland, Hungary and the Czech Republic, struck an agreement with Starbucks to bring the US giant to Central Europe. Although the agreement is non-binding, Amrest spokesman Mateusz Sielecki has said that the first Starbucks should open within 10 months of the end of negotiations, set to conclude by the end of the second quarter.

In addition to this, Alma Market, a Polish high-end supermarket has announced it will open a chain, and Romanian chain Turabo Café is rumoured to have plans to spread its wings and enter the Polish market. Petroleum giant BP also plans to open a 100-plus string of coffee bars attached to its filling stations.

"Sector competition in CEE is set to rise, but we share [Coffeeheaven] management's opinion that this is not of major concern given the nascent nature of the region's modern coffee bar sector," says David Kadarauch, an analyst at Czech brokerage Wood & Co.

Women drinkers

Just why international coffee-bar players — along with far smaller local operators — seem to be falling over themselves to bring Western-style coffee and sandwiches to the region has much to do with the changing tastes of the Central European consumer. More affluent and cosmopolitan in their tastes, they now demand a clean and smokeless café that offers high-quality food and beverages.

This is especially true for women, who before the advent of the coffee bar had few destinations in Central Europe in which to meet friends. Adam Ringer, a founder of the Polish chain Green Coffee says that women comprise 70% of his outlets customers.

The spread of shopping centres across the region has also facilitated the growth of coffee bars. With their clean environment and guaranteed high footfall they have provided an ideal source of locations for Central Europe's fledgling coffee bars — a trend that looks set to continue as modern retail fans out into secondary cities and towns.

Yet despite its growth and market potential, the sector still has to contend with significant obstacles. Coffee-bar operators point out that away from the big cities people tend to be ignorant of their product, with customers baffled by the concept of self-service in a cafe and suspicious of packed sandwiches.

The supply chain can also prove limiting, and in the past operators have struggled to find suppliers of anything from the right type of bread to muffins.

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