“We want to open a 40 to 80 square meter flagship store (five or ten times higher than a store in a mall i.e.) in a standalone space but we cannot seem to find the right place. Calea Victoriei is dead and there’s also the parking problem so we’ve decided for Dorobanti area but still looking for space,” says Dragos Staicu, 27, a partner with the business.
Neuhaus will also open a store in the Promenada mall in Floreasca (central to northern Bucharest) this fall.
“We already have a five-year plan, with the first two years of the business set for development in Bucharest and the rest for expansion in the rest of the country in the biggest cities by GDP. Our list includes Constanta, Oradea, Sibiu, Brasov and Bacau (SE, NW, central and eastern Romania).
The business could therefore generate EUR1.1 million to EUR1.2 million revenue after five years.
The main problem with a luxury chocolate business is logistics, especially during the summer because the pralines have to be kept at a specific temperature that prevents them from melting or freezing. There is also the religious factor, as people fast for four months every year, Dragos Staicu says.
This makes Neuhaus’ business highly seasonal. About 25%-30% of the sales are made over Christmas in December and another 25% over Easter. The business is very successful in wintertime and therefore summer losses have to be offset in the winter, which actually happens, Dragos Staicu says. The luxury chocolate business may start turning a profit after 12 months and the margin may be as high as 80%, he added.
“The product prices in Romania are slightly higher than in Belgium. They have a 6% VAT there, while ours is 24%. Moreover, our final price includes transportation and insurance costs. The highest prices in Europe are those in Italy and Spain, 20% above Romania’s.”
The entrepreneur expects the business of the store in Baneasa Shopping City to increase by 35%, because it sells a luxury product, and reach EUR270,000, in addition to the sales of the new stores to be opened in 2013 and the sales to four and five-star boutique hotels in Romania.
(English version by Loredana Fratila-Cristescu)