Auditors at Blank Street Coffee raised questions about inventory levels that may have been “materially misstated” after the cafe chain suffered a £2.9 million loss in its first six months in the UK, according to recently filed accounts.
Founded in New York in 2020 and funded with venture capital, the cafe opened in the UK in June 2022. It quickly became almost unmissable in central London: 14 branches opened in 2022, followed by another 15 in 2023.
Sales between launch and the end of 2022 were £1.9 million, serving 150,000 customers.
But distribution costs exceeded turnover, so the company was in the red even before administration costs, and the final loss was £2.9 million.
Gravita’s auditors said they were appointed too late to be present at the inventory, that they would not take up their duties until 2023 and that they were unable to substantiate the inventory figures in any other way.
Therefore, any figures in the accounts relating to inventory may be “materially misstated,” Gravita said.
The balance sheet shows that the company held shares worth £142,068 at the end of 2022.
Blank Street boss Issam Freiha told the Standard: “Blank Street opened its first UK store in June 2022 and the financial reports published reflect our first six months in UK business. As with many young businesses, the first few months are an important time to put systems and processes in place, including those that track and manage our inventory with absolute certainty.
“We have no concerns about the content or the balance sheet.”
In the reports, Blank Street also revealed plans to launch a subscription service that would likely be similar to Pret a Manger’s offering, which offers five drinks a day and a discount on groceries for £30 a month.
