Danish bakery and café chain Lagkagehuset, which trades as Ole & Steen in the UK, is pausing outlet expansion across its international business and focusing on organic growth in a bid to improve group profitability.
The group, which operates 108 stores in Denmark, with 26 in the UK and five stores in the US, made a DKK 182m (£20.6m) loss in 2023.
While lower than its DKK 216m (£24.5m) loss in the previous year, the figure brings Lagkagehuset’s losses to more than DKK 783m (£88.8m) over the last five years.
In a press release accompanying the results, CEO Joachim Knudsen – who joined the business in January 2024 – said “it costs money to expand and open bakeries in remote locations in some of the most expensive cities in the world”.
Lagkagehuset opened six new outlets across London and New York in 2023, as well as a state-of-the-art central bakery in London.
However, according to Knudsen, the bakery-café chain is pausing outlet expansion across all markets to “improve profitability through continued focus on costs”.
“We can see that our new strategy is working. We see an improvement in raw material prices, which gives us strengthened faith that we will significantly improve operating margins. On that basis, we are very optimistic about 2024,” he added.
Lagkagehuset posted record revenues in 2023 with sales increasing 10% year-on-year to DKK 1.46bn (£165.7m). Operating profit, meanwhile, grew 33% to DKK 129m (£14.6m).
Speaking at MCA’s Food to Go conference earlier this year, chairman David Campbell said the business has been too focussed on opening new stores.
“2024 will be more about what we can do with stores we have, rather than what we can do that’s new,” he said.
“If I had a comment on the business before, they were focused too much on opening new stores, and not enough on running the existing stores well.
“I’ve seen the same thing at Wagamama and Pizza Express, where it’s new stores, new stores, new stores. That’s not the be all and end all. It’s about growing the business through the existing footprint, while taking selective opportunities.
“When you keep running down expansion trail, you don’t spend enough time looking at the estate.”
