Kalve Coffee Expands in Europe, Profitability Lags Behind: What is the Cost of Rapid Expansion?

International growth in coffee chains is often described in terms of new countries and store counts. However, Kalve Coffee's latest financial results raise a more challenging question: When do rapidly growing sales in new markets translate into real profitability?

The Riga-based specialty coffee group has opened in Estonia, Lithuania, France, and Portugal in the last 15 months. According to a report by World Coffee Portal dated August 17, 2026, while the new European stores have significantly boosted the company's revenue, its international operations have not yet reached break-even levels.

The company’s announcement for the first half of 2026 published on Nasdaq Baltic also indicates that Kalve is trying to transition from a phase of opening stores rapidly to a phase of efficiency and capital discipline. The management describes the first half as a period of transition from "rapid growth to sustainable and disciplined development."

Revenue is Growing, but Not All Stores are Maturing at the Same Rate

Kalve Coffee's revenue for the first half of 2026 reached approximately 3.3 million euros, with EBITDA around 212 thousand euros. The revenue increase compared to the comparable period is over 50%. These figures are based on data from the company's official financial presentation.

Early signs of growth were already seen in the first quarter.

According to the company's Nasdaq announcement, Kalve Coffee generated 1.473 million euros in revenue in the first three months of 2026, with an annual increase of 52%. Coffee shop revenues increased by 50% to 870 thousand euros, B2B revenues rose by 53% to 536 thousand euros, and e-commerce revenues surged by 82% to 66 thousand euros.

Significantly, a large portion of the growth in the store channel came from new international markets. According to Kalve, operations in Estonia, Lithuania, and France accounted for 25% of coffee shop revenue in the first quarter.

However, revenue contribution and profitability are not the same thing.

The initial months of new market stores can incur high opening costs, employee training, local marketing, rent, low initial capacity utilization, and supply adaptation expenses. Kalve's current results make this difference visible.

A Store is Closing in Tallinn

The most notable decision in Kalve's official announcement dated August 4, 2026, is the closure of a store in Tallinn in August.

The management stated that despite various operational improvements, the location failed to meet the company's long-term profitability targets. It was noted that resources would be redirected to more promising projects.

This decision is significant from a growth strategy perspective.

If the performance evaluation of rapidly internationalizing chains only tracks the number of opened stores, closed or underperforming units may be overlooked.

The key question for healthy growth is:

How quickly does the company recognize a failing location, and how disciplined can it be in reallocating capital?

Kalve's decision regarding Tallinn indicates that the company is beginning to eliminate locations based on unit economics rather than keeping every store open indefinitely.

Paris and Lisbon Bring Growth to Western Europe

After entering Estonia and Lithuania in 2025, Kalve Coffee expanded into France. In the first half of 2026, it opened two new stores in Paris and one in Lisbon. The company reports that these three locations provided positive signals in terms of customer loyalty and repeat visits in the initial months. These are observations from the company management and not independent proof of profitability.

The openings in France and Portugal are also part of the company's growth plan following its IPO.

According to a previous report by World Coffee Portal, Kalve Coffee raised approximately 1.16 million euros in its public offering on Nasdaq Baltic First North in December 2024, directing a significant portion of these funds towards international growth.

As a result, 2025 became a year of rapid investment for the company.

According to Latvian Public Media, Kalve opened a total of seven new cafes in Riga, Tallinn, Vilnius, and Paris in 2025; the number of employees increased from 56 to 106, and the volume of coffee sold/produced reached 109 tons.

The cost of rapid scaling also reflected in the financials during the same period.

2024 was Profitable, 2025 Became a Year of Growth Investment

Kalve Coffee closed 2024 with strong profitability. Revenue reached 3.4 million euros, EBITDA was 322 thousand euros, and net profit was approximately 186 thousand euros.

In 2025, revenue rose to approximately 5.3 million euros; however, due to intense international investment, EBITDA fell to around 155 thousand euros, and the company reported a net loss. The annual report on Nasdaq indicates that the initial losses from new country operations contributed to this result.

This comparison points to an important operational lesson for coffee chains.

A company's revenue can grow by 50% while its profitability declines.

Especially with new country expansions, the central team grows, real estate and equipment investments are made, hiring accelerates, and stores begin to incur expenses before reaching full sales capacity.

Therefore, revenue growth and profitable growth should be tracked as separate KPIs.

B2B Revenues Can Balance Store Risks

Kalve's business model is not solely based on coffee shops.

The company also operates in the B2B channel, providing coffee, machine rentals, technical service, and employee training to hotels, restaurants, offices, and other businesses. According to Kalve's first-quarter announcement, this channel's revenue grew by 53% to 536 thousand euros.

The management argues that B2B agreements create more recurring revenue, making the business model more resilient to market fluctuations.

This structure may provide an advantage in international growth.

While the performance of a cafe is highly dependent on location and customer traffic, B2B contracts can generate more predictable sales. Particularly, selling a package of machine + coffee + technical service to hotels, offices, and restaurants can create longer-lasting customer relationships than single product sales.

In 2026, the Focus is Now on Margins

The management maintains an EBITDA target of approximately 400 thousand euros for 2026. This target was first announced in February and reaffirmed in the first-quarter results.

This does not mean Kalve is stopping its growth. However, the company's statements now emphasize improving the efficiency of the existing international network over simply increasing the number of new stores.

This change is a common phase seen in scaling coffee brands.

In the initial phase, the question is "How many stores can we open?"

In the subsequent phase, the question changes:

Which stores are truly generating a return on capital?

Lessons for Coffee Chains in Turkey

Kalve Coffee's scale is smaller than that of large coffee chains in Turkey. However, the growth problem is quite familiar.

It is not enough for a coffee brand expanding abroad to only track the number of stores.

For each country, opening investment, monthly fixed costs, employee costs, AUV, gross margin, store break-even time, and return on investment should be monitored.

Especially in prestigious cities, opening a location can enhance brand visibility. Owning a store in a city like Paris or London can be valuable in terms of communication; however, if the store is losing money for an extended period, brand value cannot replace economic sustainability.

Therefore, the healthiest KPI in internationalization is not "How many countries are we in?" but rather How many markets have positive and repeatable store economics?

Stafflink's Perspective

In the case of Kalve Coffee, we believe the positive signal is not the company's rapid growth, but rather its discipline in closing a location that failed to meet profitability targets.

In chain brands, closing a store is often perceived as a failure. However, in capital-intensive businesses, carrying a wrong location for years can be more costly than exiting in a controlled manner.

The true test of international growth is not entering a new country.

It is necessary to measure how quickly new stores reach break-even, replicate successful formats, and exit underperforming locations in a timely manner.

While revenue growth may excite investors, what will create long-term value is how much of that revenue converts into sustainable cash and profit.