I recently had the chance to share a cup of coffee with Michael and Dagmar – here´s what they had to say:
I’ve noticed Kava Kava Kava is quite similar to Starbucks – is that part of how you started?
Michael: “We were in Vancouver when that explosion occurred in the mid eighties, and we saw Starbucks grow incredibly – we saw the incredible success that Starbucks had, and one of the most amazing aspects of it was that they did it without any kind of advertising campaign. All they did was get fantastic locations and provide the best product, a far better product than their competitors…this is what Dagmar and I noticed, and recognized, and that was one of our models when we were putting together the Kava Kava Kava model. We had the Starbucks model in front of us.”
Have you faced a lot of bureaucracy here?
Michael: “We´ve faced problems with our landlord – this property [Narodni Trida location] is owned by Prague 1, the magistrate…
“[At one point] they served us with a notice of eviction, so we hired a Czech lawyer, all he wanted to do was to bribe them, and we said no, we weren´t interested in bribing them. So we hired an Austrian lawyer, and within a week we had settled the case, they backed off their eviction notice.”
Dagmar: “It´s not transparent, it´s a lot of bureaucracy, a lot of things that are not right are happening. When we were closing the deal here we were not told about different expenses, and we were treated very poorly.”
Were things any better with the Andel location?
Dagmar: “Well, it´s very different because we have a private owner there, not the city…dealing with the private owner is more straightforward, transparent; there is no bullshit attached like there was here, like you find out months later, they forgot to tell you ‘by the way, you are going to pay 100,000 crowns more than we actually told you, but it´s just a little detail.´ Those little details, which the city sort of threw on us, a private owner doesn´t. There are other problems, but not of this type…people are able to negotiate in an intelligent way, but the city wasn´t.”
Has it gotten any better since the Czech Republic entered the EU?
Michael: “I would say no; in fact, it has made our business more difficult. Before they joined the EU, as a restaurant we were allowed to charge 5% DPH…when they changed it that was increased to 19%, so it was a 14% increase in the chunk that the government was taking from our profits – basically that was our profit margin; that basically ate up all our profits. So we had to increase our price, which caused a lot of Czechs to stop coming to our place. As far as benefits of joining the EU, I can´t at this moment think of any…
“I suppose we could say that our landlords, the bureaucracy, now have to worry about us going to Strasburg, or appealing decisions to Strasburg…so maybe that has an indirect effect, that they are less likely, or more reluctant to put the screws to us as they have in the past. But these are things that we don´t know because we never hear about them.”
What are your business plans for the future?
Michael: “Our original business model was to have six stores in the downtown Prague area, and we still have that as kind of a goal, but we need to find partners who will work with us on new stores…the right kind of partners who want to open similar operations like we have here and Lidicka. We´re not interested in franchising…the problem with franchising is difficulty keeping the quality control – how to ensure quality control with franchisees who may not have the same interest. The one thing that we´ve maintained throughout the ten years of our operation is the quality of our coffee, and that´s not an easy thing to do, because you have to be able to inspire your employees, to make them want to want to produce good coffee.”
What do you like and dislike about living in Prague?
Dagmar: “It´s very picturesque, very peaceful, and it´s relatively relaxing when you get out of Prague…it´s a city that has a lot to offer; culture is cheap, if you want to go see opera, a play, concert, it costs next to nothing, everyone can afford it.
“But life is much easier in Vancouver than it is here; it´s easier to get around, the air is fresh…if you need someone to fix up your house, he is there, he fixes it up, there are no problems to find a painter or a plumber or whatever…even when we go for trips in the Czech Republic, we are always apprehensive – will we make it? The drivers are horrible here, they are not courteous…”
Michael: “In North America the idea is to get from A to B and be alive; here, for some reason, it´s not that simple, there´s some kind of contest happening, some macho interplay – they´re playing some game and I don´t know the rules…
“But what I like about Prague…there´s a connectedness that you don´t find in America – to the people that lived here before you, to the environment – I never felt a part of that in Canada…to be able to be surrounded by so much history, so much of the past, you just feel more connected to your place.”