The business model of the Italian lifestyle brand Vapiano is simple: Innovative “Fresh Casual Dining” (FCD) located between a quick-service-restaurant like McDonalds and classical seated dining restaurants. Once the guest enters the restaurant, he receives a card that he shows when he is ordering pizza, pasta, or salads on the counter. The food is made from scratch daily with fresh ingredients and cooked in a few minutes in front of the guest. The payment is done by leaving the restaurant with the amount on the card. The price is also reasonable between 8 and 15 euros.

The German restaurant chain founded in 2002 in Hamburg with headquarters in Colonia was a success story in the last 10 years:

Successful IPO at the Frankfurt Stock Exchange in 2017, raising about 184 million euros resulting in a valuation of about 553 million euros 

The restaurant chain had a lot of success until 2015, but later on, wrong decisions and bad luck turned the game. There has been news about hygiene deficiencies in

individual restaurants and a low work performance of employees, which are a disaster of a restaurant chain like Vapiano. The new CEO Jochen Halfmann with a jewelry and perfumery industry background, tackled these issues, but they had made other strategic mistakes like too long preparation time of new dishes. Fast preparation time is a promise of Vapiano which couldn’t keep. After the successful IPO in 2017, Vapiano realized an aggressive expansion by opening new restaurants at a fast rate (including Mexico, Brazil, Saudi Arabia, Egypt, and China) to reach 330 locations by 2020. This aggressive strategy led to mistakes like location selection and a lot of locations made a lower revenue than internally expected. The CEO Jochen Halfmann resigned on November 30, 2018, and Cornelius Everke (former Starbucks CEO) took over.

As a consequence of the strategic decisions made in 2018 sales increased because of new openings which also provoked a loss of 101 million euros in the fiscal year. (after losses of 31 million euros in 2017). It has reduced the equity from 131 million at the beginning of 2018 to 46 million euros even considering a capital increase of 20 million euros at the end of the year. The equity ratio fell to 13.3% compared to 2017, with 37.4%. The liabilities increased very strong because of non-compliance with financial covenants. Thus, a revolving credit facility had to be reclassified. The events of 2018 also impacted the cash flow of operating activities which was -915.000 euros in comparison with 11 million euros in the previous year. This is mainly because of negative business development and newly opened restaurants.

Normally public companies have 3

months to publish their financial statements and it is not unusual that companies take more time, but Vapiano lasted a lot of time to present the results of the first six months in 2019. It is not new that the company is in a crisis due to the expansion strategy and decreasing guest loyalty. In 2018, the publication of the financial statements was postponed three times as a loan of 30 million euros was needed.

The negative trend of 2017 and 2018 keeps up in 2019 as the financial results of the first six months show. The consolidated revenue increased to 196.6 million euros, mainly due to new openings and acquisitions. Considering the same restaurants (like-for-like sales) of 2018, the revenue decreased by 3.2%. Because of the amendment of IFRS 16 leases, the liabilities of Vapiano increased sharply as they don’t own any restaurant. The liabilities increased to 470 million euros (199 million euros without IFRS 16) which is higher than the yearly consolidated revenue. The equity ratio decreased to 2% (5% without IFRS 16) including the effects of IFRS 16 due to the negative results (-34 million euros).

Even by not considering the impact of the IFRS 16 on the financial position, the future looks still gloomy. The leverage (Net debt/EBITDA) is going to be between 8 and 10 times which is quite high for a company and not acceptable by financial institutions. This ratio should be below 3.5 times as it was at the end of 2017 (3.05x).

The new CEO Cornelius Everke resigned surprisingly on August 30th, 2019, 9 months after taking over and deepening the crisis in the restaurant chain. After him CEO Vanessa Hall wants to increase guest loyalty and lead the restaurant to a positive free cash flow in 2020 and break-even by 2021.


The case study of Vapiano shows the consequences of an aggressive expansion strategy of a young company. The learnings are that it is not possible to have both a fast expansion and a good service quality. Once there are strategic mistakes, the financial consequences will be big. A fast expansion strategy leads to mistakes in planning, such as location selection and contracting qualified employees.

My recommendations for Vapiano and any company with a fast growth rate are:

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