The Danish bakery-café chain will focus on organic growth to improve profitability following sustained losses due to high operating and outlet expansion costs
.jpg.aspx?lang=en-GB&width=700&height=393)
Lagkagehuset has accumulated losses above DKK 783m ($112m) over the last five years | Photo credit: Lagkagehuset
Danish premium bakery-café chain Lagkagehuset is pausing outlet expansion across its international business and focus on organic growth in a bid to improve group profitability.
Lagkagehuset, which operates 108 stores in Denmark and trades as Ole & Steen with 26 and five stores in the UK and US respectively, made a DKK 182m ($26.1m) loss in 2023.
While lower than its DKK 216m ($31m) loss in the previous year, the figure brings Lagkagehuset’s losses to more than DKK 783m ($112m) 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 ($209.5m). Operating profit, meanwhile, grew 33% to DKK 129m ($18.5m).
Scottish specialty coffee roaster Modern Standard supplies all Lagkagehuset stores across Denmark, the UK and the US.