Tobias Zimmer spills the beans on how slinging java enabled Coffee-Bike to expand from the streets of Germany, across the globe and onto British shores
Whilst the parallels between poultry and prepping espresso shots might not be immediately clear, chasing round after chickens taught Tobias Zimmer everything he needed to know about the world of business. In the six years since Zimmer, co-founder and CEO of Coffee-Bike, first launched the mobile coffee franchise in Germany, he has never forgotten the lessons he learned from his earliest entrepreneurial experience. “As a child, I used to take the eggs and sell them around the neighbourhood,” he says.
The experience firmly instilled in him one of enterprise’s toughest home truths: there is no such thing as a free lunch. “My parents told me that if I made money then I had to buy the chickens’ food,” recalls Zimmer. Covering the expenses of keeping poultry slashed his profits but taught him the benefits of growing a business. “On their own, two chickens weren’t profitable, so I had to double the number I kept,” he explains. “Ultimately, I ended up having over 50.”
Zimmer’s enthusiasm for keeping his feathery friends faded as he grew older. “About the time I turned 12, I realised that running a chicken business wasn’t a cool thing to do,” he laughs. But before long he was ready for another shot of entrepreneurialism. “I started my first real company when I was 16,” says Zimmer. “It was a small agency that helped people sell products on eBay. It was usually more senior people who weren’t that tech-savvy and didn’t understand the internet properly.”
Through these entrepreneurial endeavours, Zimmer managed to fund his studies at universities in Marburg, Leipzig, New York and Seoul, eventually securing an MBA and a business administration diploma. Still, Zimmer’s earlier experiences of keeping poultry and trading on eBay had given him a taste for the startup life and fortunately his childhood friend Jan Sander was of a similar mind. “We’d always talked about starting a business together,” says Zimmer.
The spark that led the two entrepreneurs to found Coffee-Bike was ignited during a holiday in Denmark. “We were in a park and saw a man selling coffee from a bike,” he says. “The coffee wasn’t very good. It was cold and of low quality but people still bought it. Watching him, I couldn’t stop thinking about what kind of margins he must’ve been making.” Zimmer realised that he and Sander could easily slash many of the overheads facing regular coffee shops – such as rent – by emulating the man from the park. “The basic idea of Coffee-Bike came from that moment,” he says.
However, turning that grain of inspiration into red hot reality wasn’t without challenges. For starters, the friends needed funding for their enterprise. Like many do in times of adversity, the two entrepreneurs turned to friends and family, asking them to help fund the venture. While some eagerly embraced their vision, others were not as easily persuaded. “Some of my friends were really sceptical,” laughs Zimmer. “They thought I was crazy for wasting my double-degree on selling coffee on a bike. They were like: ‘Are you kidding me?’”
Still, enough of their nearest and dearest believed in the idea for Zimmer and Sander to begin to lay the company’s foundations. “We started building our first coffee-bike in our parents’ garage,” he says. Doing so enabled them to focus their limited funds on the hiring of engineers to provide support and technical knowhow on the best way to make the bike work. “Before long, we had two prototypes that Jan and I took out and sold coffee with.”
However, that first excursion slinging java on the streets of Osnabrück in 2010 only marked the start of an intense 12-month testing period. “We sold coffee from Thursday to Sunday, raising some revenue and writing down adjustments we needed to make,” explains Zimmer. “From Monday to Wednesday, we implemented the improvements before hitting the road again.”
The testing period also uncovered an unexpected challenge. “We didn’t anticipate the technology would become so expensive,” confesses Zimmer. Part of the reason for these spiralling costs was the fact that the technology didn’t just have to enable the bikes to produce high-quality coffee for passers-by; the founders also had to ensure the bikes followed health, safety and traffic regulations. “We thought we’d have to spend €30,000 or €50,000 on tech,” the java-slinging entrepreneur says. “In the end, we spent more than €600,000.”
With the tech in place and the coffee-bikes up and running, the company quickly grew to having six bikes in two cities in 2011. But this success presented them with new hurdles to overcome. “We reached the point when we were working about 17 hours a day,” says Zimmer. “Another problem was that each coffee-bike was more profitable when Jan and I operated them. We realised that, to make a profit, we needed the guy operating the bike to be an entrepreneur just like us, someone who really identified with the bike.”
Wanting not to fall victim to their own success, the partners decided to franchise the company. And they were clear from the get-go about what attributes prospective franchisees should have. While other franchisors might rely on technical knowhow, the new crop of Coffee-Bike franchisees would need to be naturally social. “That is really important,” says Zimmer. “This is a people-based business; it’s all about personality.”
But even though Coffee-Bike looks for people skills over technical knowhow, Zimmer reveals that there is still one thing he searches for on prospective franchisees’ CVs. “I want to see that they finish what they start,” he says. “Whether it’s university studies or being in self-employment, it is important that you’ve seen it through to the end.” The approach has resulted in a surprising blend of recruits. While some of Coffee-Bike’s franchisees have spent their careers behind supermarket tills, others have abandoned high-paying bank jobs to serve up lattes.
And this franchisee recruitment strategy has proven successful. Since Coffee-Bike first took to the streets of Osnabrück, the company has expanded to having over 100 franchisees in Germany and has also successfully set up shop across Europe as well and has established a base in locations such as Qatar and India. And, in May of this year, the company launched its first franchise in the UK in Trowbridge. “We did a big market study of all European countries and realised that the UK was the most interesting for us,” Zimmer explains.
More UK franchisees are set to follow in the coming months. These new franchisees can rest assured that the two founders understand the hardships of serving up cups of joe on the streets. “There were some really challenging times along the line,” concludes Zimmer. “But, in the end, it has all been worth it.”