Kosmo Coffee co-founders C.A. Lin (left) and Fion Lin explain Hong Kong’s importance as a base for their international expansion

Headquartered in Hong Kong, the company is set to open its fifth mainland outlet, in Beijing's trendy lakeside neighbourhood of Shi Cha Hai, this September.

Having a Hong Kong base is a key strategy for Kosmo Coffee, a healthy food and beverage operation which donates a portion of profits to UNICEF, Ms Lin said. In addition to its Hong Kong flagship store, the company has so far this year opened four outlets in the Chinese mainland city of Shenzhen, and one in Guangzhou.

"Location is vital for us," explained chief executive officer C.A. Lin. "We knew we had to be in Central, hub of Hong Kong's business and financial district, because of the area's cosmopolitan crowds."

The customer profile Kosmo seeks is quite similar to that of its team of 10 founding partners: vibrant, health-aware, professional and cosmopolitan - the last quality being the inspiration for the company's name. The partners come from Hong Kong, the US, Australia and UK.

"We set up in Hong Kong for several reasons," said Mr Lin, a trained financial lawyer. "Five of our investors met here and we felt that there was a gap in the market between coffee shop and fine dining for quality, affordable, healthy food and drinks."

Busy from opening day

On this count, the Central outlet on the fringe of the Lan Kwai Fong restaurant and bar precinct was packing in crowds from week one. Despite opening in March, just before the Sars outbreak, April and May were very busy months, with sales more than 25 per cent above projections. Eight additional staff were drafted, and have remained on the payroll, making a total of 32 in the two-storey premises that conducts two shifts to deal with its long operating hours.

"Registering the company and finding reliable skilled back-up for all of our infrastructure was easy in Hong Kong," Mr Lin said. "We successfully established our point of sales and IT requirements here, as there are a lot of experts in these fields to choose from."

Kosmo Coffee had specific IT requirements. The company has its own smart card that stores pre-paid credit for customers, allowing them to dispense with cash and offering a discount on purchases as a loyalty reward. Later, customer preference information will be integrated so that service staff may offer knowledgeable suggestions to cardholders, as well as greeting them by name.

The company is planning a rapid expansion, with 12 outlets scheduled for Hong Kong in the next three years, two in Australia by the end of the first quarter of 2004, and an unspecified number in China. Each smart card issued will be able to be used in any outlet in the country of issue.

"China is our key," added Mr Lin. "We are now in partnership with the US retail giant Wal-Mart's Sam's Club. The chain has five outlets in China and is aiming at opening 50 more in the next three years, so this should have great implications for Kosmo Coffee.

"There will, of course, be many more opportunities in the mainland and Hong Kong is our perfect springboard for this."