Speaking at the Peach 20/20 Leaders Summit this week, Potts commented on the success of the bar company’s first overseas outpost in Berlin, which opened in 2023.
“Growth is baked into the business and management structure,” he said. “We knew sooner or later we’d run out of whitespace in the UK. We need pumping metro cities, so we decided to get in front of it.
“We’re getting a sense of what we can achieve [in Germany] on the back end of our first franchise agreement, and we hope to have a site open further East next year.”
Learning curve
The Alchemist is now well established in the UK – with more than 20 sites – but it has nevertheless been a learning curve to set up the business in a different economy, Potts explained.
While site selection is data-driven, it has taken many visits to Germany to obtain local knowledge and understand the market.
“You’re doing interesting work, and things you’ve not done before,” he added. “You have to understand the area in advance but accept you’ll never know it all from the outset.
“We’ve got a brand we understand and have engineered to death in the market we started in.”
Labour costs rise
The group knew it was entering a high-cost economy, but could achieve a “trade-off” on the P&L due to the lack of business rates in Germany.
It ran at 50-60% labour costs in its first three months in Berlin, but later managed to bring those down to a more sustainable level, while applying learnings from Germany to the UK as labour costs continue to rise at home.
Pushing into other markets also adds a community of potential investors, Potts explained.