Berlin's LAP Coffee, shrugging off critics, pushes German expansion

When Ralph Hage launched LAP Coffee three years ago in Berlin with a mission to bring cheap brews to Germany's "poor but sexy" capital, he had little inkling of the backlash its 2.50-euro ($2.92) cappuccinos would provoke.

The startup may be winning over a growing cost-conscious following. But it has also divided Berliners, prompting an online campaign dubbed "LapCoffeeScheisse" and a wave of vandalism that, in October, left many of its increasingly ubiquitous blue and white grab-and-go outlets splattered with red paint and "Boycott LAP" slogans.

Hage, however, is undeterred. And shrugging off the haters, LAP, which operates 30 stores in Berlin, Munich and Hamburg, is pushing deeper into Germany's biggest cities with plans to open another 20 this year, targeting Cologne, Duesseldorf and Frankfurt, he told Reuters.

“The idea that LAP can actually monopolise the German market is very far-fetched,” said Hage, who moved to Berlin from New York seven years ago, adding "if we open two stores per month, it would take us 450 years to monopolise coffee in Germany."

Europe's largest economy was still struggling to regain its pre-pandemic momentum when the outbreak of the Iran war drove up prices, once again delaying a long-awaited recovery. Already known as frugal, Germans are watching their spending even more closely.

Amidst all the economic angst, LAP - an acronym for Life Among People - is pitching itself as a pocket of price certainty in unsettled times.

"Coffee futures are down 8.3%, inflation is up 2.3%. Markets change, our prices don't," reads a stock market-style ticker scrolling across the top of its homepage.

Berlin's traditional coffee-and-cake cafés have evolved in recent years into relaxed, modern spaces where customers can linger for hours sipping specialty drinks skilfully prepared by the city's legion of baristas.

But that culture comes at a price.

Berlin roastery 19grams, which operates several coffee shops across the city, charges 4.20 euros for a small cappuccino, 5.20 euros for a large. 19grams also supplies coffee beans to LAP.

"Germany is a very difficult market,” said owner Gerrit Peters.

Two things largely make up those extra costs: service and rent.

LAP's answer is what Hage calls a "micro-retail" model: tiny stores, minimal staffing and coffee-to-go in areas with high footfall.

By cutting costs per cup and relying on quick turnover in compact locations, LAP is betting convenience and volume can beat the traditional coffee house formula of longer stays and bigger tickets.

Still, some Berliners see LAP's quick-hit takeaway model as a threat to the city's coffee culture with critics warning that sit-down coffee shops cannot compete on price.

In the city's hip Kreuzberg neighbourhood, Nikita Jung and a friend exited a LAP Coffee empty-handed following a sudden bout of guilt.

“We thought it wasn't worth drinking a cheap coffee if the smaller cafes die out because of it and so we decided to leave again,” she told Reuters.

-Martin Schlicht, Leon Malherbe, Oliver Barth, Ulrike Heil, Tanya Wood/Reuters