After coffee and matcha: the trendy chain that found its next temptation

The coffee chain Blank Street has raised $75 million from investors, including the private equity firm General Atlantic, as part of a move to expand its operations on the US West Coast and increase its product offerings, as reported last night (Sunday) in the Financial Times. The company, which seeks to position itself as a "daily luxury" brand, plans to expand beyond coffee and matcha and also offer products such as ice cream and light snacks.

Blank Street, which was founded about six years ago and started as a single coffee cart in Brooklyn, has become one of the fastest-growing coffee chains and is trying to compete with long-standing players like Starbucks and Costa Coffee. Today, the company operates more than 100 branches, mainly in New York and London.

Now the chain is turning its attention to California. According to co-founder Issam Freiha, Blank Street is opening new branches in established areas, including Beverly Hills, West Hollywood, and Malibu. The expansion comes after the brand gained popularity, especially among a young audience, partly thanks to its matcha drinks, which became a hit on social media.

"Matcha is a critical part of our menu, on the same level as coffee. However, we don't want to be identified with just one category," said Freiha. According to him, the company's vision is to turn Blank Street into a "daily luxury brand" that accompanies customers throughout the day — from coffee in the morning, through matcha in the afternoon, to small products like ice cream.

The company's internal data already reflects the change in consumption habits. According to Freiha, most of Blank Street's sales take place in the afternoon, with the fastest-growing time window in the chain's activity being after 4:00 PM. As a result, he said, the company had to "completely rethink the menu, the hospitality experience, the store design, and the operational flow."

In the previous funding round, which took place last year, Blank Street was valued at about $500 million. According to a person close to the company, the current funding round reflects a valuation of about $650 million, including the new capital injected. Some investors hoped that the new funding would push the company's valuation close to $1 billion, but Freiha said these expectations were incorrect.

Among the company's investors are also Left Lane Capital, General Catalyst, and Tiger Global — entities usually associated with investments in high-growth technology companies, and not necessarily in coffee chains. Tiger Global also invested in the PopUp Bagels chain.

The investment in Blank Street fits into a broader trend among large investors, who are also turning this year to traditional businesses with a physical presence. One of the reasons for this is the desire to hold assets and companies whose operations are expected to be less exposed to the direct impact of the development of artificial intelligence.

General Atlantic holds, alongside its investment in Blank Street, also the Danish coffee, juice, and sandwich group Joe & The Juice. The investment firm manages assets totaling about $130 billion and has also invested in the fitness brand Gymshark and the non-alcoholic beer producer Athletic Brewing Company.

General Atlantic stated that they see the out-of-home coffee and matcha market as a large and growing category that enjoys stable consumer demand. According to them, they look forward to working with the Blank Street founding team on further developing the brand and expanding operations in the US and the UK.