Home / Business and Politics / Yellow Submarine Focuses on Expansion in Central and Eastern Europe

Yellow Submarine Focuses on Expansion in Central and Eastern Europe

Until a few years ago, fast food in Croatia was dominated by greasy ćevapi with or without soy, burek, gableci with flour roux, and of course, global brands, making it hard to even imagine, let alone dream, that craft burgers in brioche buns, something previously unknown to the local public, would cause any kind of turnaround. Perhaps precisely because of this – or despite it – Yellow Submarine has exceeded expectations. The founders, guys from Rijeka who were merely daydreaming, not only created a niche for craft burgers that many are now copying but also succeeded in something that the food preparation sector is not particularly adept at, at least not here – they managed to attract the attention of investors and thus secure the necessary funds for business expansion. With the support of the financial sector, Yellow Submarine is now expanding its operations beyond Croatian borders, proving that even in markets dominated by global players, there is room for entrepreneurial projects that bring authenticity and success. This means that a good idea and strategic vision, as well as concrete capital, can transform the market and extend beyond the confines of Croatia, even into the neighboring regions. Indeed, Yellow Submarine has recently made its first regional steps by acquiring Vivo, a chain of burger bars in Romania, and it does not intend to stop there.

One of the founders, Aleksandar Lazinica, realized that burgers are not and do not have to be junk food while living in America, in New York, where he became acquainted with the craft burger scene. The idea of launching something like this in Zagreb appealed to his friend, and later partner, Dragoljub Božović, and the duo embarked on the adventure together. At that time, Božović was working in a family business that dealt with wholesale and retail of household appliances, while Lazinica, an engineer in mechanical engineering and robotics, still runs Underline Science, a company for virtual scientific conferences, which he calls ‘Netflix for scientists’, and is also the founder of IntechOpen, a publisher of scientific open-access books. However, the hunger for a new challenge was stronger, so in 2014, after considerable preparation and work on the idea, they opened the first Submarine location on Frankopanska Street in Zagreb.

Market Education

Challenges were plentiful. First, it was necessary to educate the market about the product because people considered burgers to be junk food, or a cheap meal made from poor ingredients. Accordingly, they expected burgers to be cheap. Besides explaining to consumers why the price is what it is, it was also necessary to educate suppliers about the quality they were looking for. And what exactly they were looking for.

– At that time, for example, it was not possible to buy brioche buns on the market. We had to educate bakers on what brioche buns are and how to make them, as well as how to consistently maintain quality. The same goes for fries because Submarine does not use ready-made, frozen fries; we bake them ourselves daily – emphasize the founders, who successfully overcame all these obstacles.

The business grew significantly. Locations sprang up in many areas, revenues also increased, so much so that in 2021 the company was included in the prestigious Financial Times ‘FT 1000’ list as one of the thousand fastest-growing European companies. With a total growth of 221.4 percent and revenues of 4.5 million euros in 2019, Submarine ranked 720th on that list, becoming the only non-tech company from Croatia to receive this recognition. Restaurateurs, recognized by such a reputable magazine, this cannot be a coincidence.

– The recognition from the Financial Times was an incentive for further development of the company, but also an important signal for us that we are on the right track. Namely, the list of the thousand fastest-growing companies is formed according to rigorous criteria, and the Financial Times thoroughly checked our business documentation. Not only were we the only non-tech company on the list from this part of Europe, but as a subject from the hospitality segment, we managed to achieve a 30 percent growth during the pandemic year of 2020, which was significant in itself. This recognition confirmed that we should continue to expand and open new markets – Lazinica told us, adding that the company now has 19 locations across Croatia and will soon open two new locations in Pula and Varaždin.

As Submarine grew, it caught the eye of the financial sector. At the end of 2022, the majority stake was acquired by the Prosperus Growth fund, which brings a new business structure. According to Lazinica, Prosperus brought its expertise in mergers and acquisitions, corporate governance, and finance, and according to Tomislav Tičić, one of its partners, the fund has focused Submarine on strategic growth and operational excellence while preserving brand authenticity and creating a foundation for international expansion.

What was the fund’s contribution, how the company operates, and what the next strategic moves are, after acquiring burger joints in Romania, read in the printed or digital edition of Lider.

Tagged: