New US coffee chain plans to take on Starbucks in London

Key to the Blank Street Coffee formula is to undersell the ubiquitous competitors

A Starbucks coffee shop in London faces a new competitor in Blank Street Coffee which aims to undercut their prices.

Blank Street Coffee, the fast-growing New York-based chain, is bringing its inexpensive espresso to London in June. 

The first location is set for Fitzrovia, near University College London. 

The company plans to open additional locations in quick succession in the area while expanding into the residential Marylebone neighborhood.

Blank Street is accustomed to moving fast. The chain was started in summer 2020 by Vinay Menda and Issam Freiha. 

They now have 29 places around New York, from downtown Brooklyn to the Upper West Side; they plan to have 100 locations in the city by the end of this year.

This year the company will also open two dozen shops in the UK.

Number of UK coffee shops rising

The expansion follows recovery in Britain’s coffee shop market to £4.4bn (€5.2bn) in revenue last year; the number of UK coffee shops now exceeds pre-pandemic levels.

“Our second-biggest city will be in London,” says Mr Freiha, who grew up there and is a former managing partner at Reshape Ventures, a venture capital firm.

Blank Street’s expansion is fueled by more than caffeine. In 2021 it raised $60m (€55m) including $25m in Series A Funding from General Catalyst Partners and Tiger Global Management.

Key to the Blank Street formula is to undersell the ubiquitous competitors. In the US, a Blank Street latte sells for $3.50 (€3.19); at Starbucks Corp., a grande latte costs $4.95 (€4,51); at Dunkin’ Donuts a medium latte goes for $4.29 (€3.91). 

“We’re about 25% to 35% cheaper than Starbucks on espresso,” says Mr Menda. Buying beans locally, from such companies as Parlor Coffee Roasters in Brooklyn, helps keep costs down, he says.

The price of a London latte hasn’t yet been determined. 

I can tell you that we'll serve high-quality specialty coffee, and our prices will be cheaper than Costa Coffee and either the same price or cheaper than Pret a Manger. 

A further aspect of Blank Street’s formula is to sell their beverages out of small spaces with inexpensive rents, as well as from retro-styled trucks that could double as mini-Airstream trailers. 

Occasionally, they’ll share a space with another brand; in Park Slope, part of the store is operated by The Sill, who specialise in potted plants.

Indoor hangout spaces filled with people staring at laptops are not part of the equation; smaller-footprint locations help keep operating costs down.

“We have [monthly] rents and licensing fees that range from $1,000 to $10,000,” says Jonathon Maine, a former WeWork executive who heads real estate and development for the company. 

• Bloomberg