Candid Coffee owner Lorenzo Castillo shares how he’s made his business grow despite the competitive market and rejection from investors. 

Coffee shops seem to be sprouting out of thin air these days, and this is not limited to the mainstream coffee chains. These days, it almost seems like there’s a specialty coffee shop anywhere you look. 

In fact, the Specialty Coffee Association of the Philippines notes that there has been a 40% increase in specialty coffee shops from 2020 to 2023 across major cities in the country. Third-wave coffee shops, in particular, have risen in popularity as people began to look for artisanal, more premium coffee. 

Given the rapidly growing number of coffee shops, the market has become very competitive. Standing out and scaling have become difficult challenges that many entrepreneurs in the market have to face. 

Candid Coffee, a specialty coffee chain, is no stranger to such challenges, but the brand has risen past them and scaled. What was once a coffee startup has now grown into a coffee chain boasting six branches in key locations in Metro Manila. 

In an interview with The Business Manual, owner Lorenzo Castillo shares the humble beginnings of his business, how he made sure his business stood out, and how he was able to grow his brand despite rejection from investors. 

Dabbling in the Kitchen

He may not have known it then, but Lorenzo’s entrepreneurial journey started in the kitchen. He shared that growing up, while other kids watched cartoons, he was watching the likes of Bobby Flay and Rachel Ray on the Food Network.

“I consider myself a home cook,” he said. 

By the time he was about to go to college, he naturally wanted to take up culinary arts. However, his parents didn’t agree, so he ended up taking a generic business course. This did not stop him from being passionate about food, and he even dabbled in some food hustles that were really nothing serious. 

“After college, I knew I didn’t want to work corporate, so I went into the academe, teaching for a year,” Lorenzo recalled. “Later on, I discovered that I’m not really employee material since I’m always looking for something to create and keep myself super busy and productive.”

His interest in coffee started when his brother gave his mother a home espresso machine. Since he was always dabbling in the kitchen, the appliance eventually caught his attention. 

“Since I’m always playing around the kitchen, I ended up using it and being addicted to perfecting the latte art. That was my gateway to enter the deep rabbit hole of specialty coffee,” said Lorenzo. “I decided to focus on the craft knowing it’s one of the most consumed commodities in the world, meaning it’s not only artisanal, but it’s a timeless product and very sustainable and lucrative as well.” 

Photo by Jaja Samaniego

Being Candid About Coffee

Lorenzo admits that initially, he “hated all those fancy coffee stuff since I found it so pretentious and intimidating.” It was only after he dove into the world of specialty coffee that he realized there’s a “geeky aspect” that’s actually very interesting. However, he wanted to present all of these in a way that’s more approachable and relatable. 

He eventually came up with the name Candid Coffee, which is meant to reflect his naturally frank and straightforward nature. It’s also a homage to his father, whose name is Candido.

“My competitive moat lies within our brand ethos to make coffee more fun, approachable, and relatable,” Lorenzo explained. “I think all other brands sound the same and our tone sets us apart.”

Being naturally kuripot as well, Lorenzo was able to save enough money from his allowance, which allowed him to invest PHP 180,000 of his own funds to his business. He also resorted to borrowing things from his parents, particularly his mother’s espresso machine. This allowed him to allocate his money to consumables, small tools, and a coffee cart, among other things. 

By 2017, he was able to set up a coffee cart at Sidcor Sunday Market.

From Side Hustle to Full-time 

When Lorenzo started his coffee cart, it was a side hustle that he was balancing with his teaching job. It actually took him four to five months before Candid started making significant sales.

“I wasn’t really making much. Probably even losing money,” he recalled. “But I just kept on, waking up every 4 a.m. on Sundays to sell coffee just for the sake of providing better coffee in that market.” 

By the time he was ready to devote all his time to his business, Lorenzo was certain he did not want to open retail stores. For him, retail stores are “big headaches,” and he was aware of the high turnover rate of food and beverage businesses. He eventually decided to focus on roasting and wholesale. 

“I was supplying to a hotel key account, which kept me alive, and a few small accounts here and there,” Lorenzo recalled. “Obviously, the pandemic pushed me to pivot into B2C and that showed the big potential of [the] retail business.”

With sales quadrupling in 2020, Lorenzo decided to go to a show known as The Final Pitch to showcase the potential of scaling his business to investors. 

Photo by Nicco Valenzuela

Going into the Shark Tank 

 “I watch a lot of Shark Tank,” Lorenzo candidly shared. “I consider myself as a craftsman and not a finance person, so my basis of pitching [is] from [the] Shark Tank shows.” 

“I went on The Final Pitch with a lot of finance gaps,” he added. “My simple understanding is that, with one branch, I can make x amount. So, if I open four more, I would quadruple my sales.” 

Lorenzo recalls “arbitrarily valuing my company at PHP 150 million.”

“I was asking, I think, PHP 15 million for 10% of the company since if I open four more branches, I could generate around PHP 20 million a year based on current data.” 

Despite his best efforts and willingness to do what it takes to scale his business, investors rejected this pitch. This, he mused, led to a “funny realization that I needed to work more on my numbers.” 

More importantly, the experience fueled him to prove those who rejected him wrong. 

Relying on Friends and Family 

After going on The Final Pitch and not getting the desired outcome, Lorenzo opted to try out crowd funding and debt financing. While listening to a podcast called How I Built This with Guy Raz, he learned how asking for help from friends and family is a good route for startups, which led him to try it out. 

“I took a PHP 1 million loan from my dad with a 10% interest and was able to build from there,” he shared. “So after having a few branches opened, I was able to build enough to have banks grant me clean credit lines which helped me fund expansion.”

From a coffee cart at a Sunday market, Candid Coffee now has six stores across key locations in Metro Manila. For 2023, the company’s top line revenue reached PHP 61 million. The company’s net revenue, according to Lorenzo, is PHP 15 million. 

Recalling his experience on The Final Pitch, there is one more thing Lorenzo has to say about it. 

“I’m happy to say that I outperformed my pitch,” he revealed. 

The 4 Cs of Success 

Candid Coffee has gone a long way since its coffee cart beginnings, and Lorenzo has seen significant successes—both big and small—along the way. For him, the key to success can be summarized by four words that all begin with C. 

“A mentor once told me the key to success lies with 3 Cs—capital, connection, and competency. Just have any of those 2 Cs, and you’re good,” Lorenzo recalled. “I made it a point to have all three but also added one more C–Christ.”

“Some say it’s luck or serendipity but for me it’s faith-based. An intangible thing,” he explained. “You can work your ass off, but if you don’t have faith backing you up, it’s hard to succeed.”

For Lorenzo, faith and timing are the key ingredients that helped him and Candid Coffee get to where they are right now.

Photo by Nicco Valenzuela

What Entrepreneurs Can Learn from Candid Coffee

Given the competitive coffee market here in the Philippines, many entrepreneurs may be struggling to find their footing and get their businesses going. For Lorenzo, having a stable foundation will help solve this. 

“First, start with a genuine problem you want to solve. Don’t start a business just to profit or make money,” the Candid Coffee owner advised. “Know what problem you’re solving, and you’ll naturally have a solution that will bring value to people’s lives.” 

“For me, I wanted to make coffee more fun, approachable, and relatable and thus, having Candid as my solution,” he added. 

Lorenzo advises entrepreneurs to “go beyond just the coffee.” 

“Lahat naman kaya gumawa ng good coffee eh (“Everyone can make good coffee),” he pointed out. “But your reason for existing is what will set you apart.”

After identifying the problem, Lorenzo recommends digging deep when it comes to finding the solution because it’s the value that entrepreneurs are bringing to the table. Aside from this, he tells entrepreneurs not to be afraid to ask.

“Asking questions got me a lot of valuable lessons I wouldn’t have been able to learn if I was shy or reserved. I constantly seek out mentors and tips from ultra-successful business owners,” he explained. “You won’t lose anything by asking. I don’t pretend to know everything, and there’s always something to be improved on.”

What’s Next for Candid Coffee

While Candid Coffee has achieved significant success since its coffee cart beginnings in 2017, it has dawned on Lorenzo that “Candid isn’t just about myself but the people I’m leading.”

“I’m figuring out how to inspire and motivate and empower my people,” he said. “It’s hard because I’m not naturally a leader so it’s a work in progress.”

Lorenzo revealed that it’s his dream “to share the blessings with the core people of the company and also share revenues with our branch managers and stakeholders.” He recognizes that they are the reasons why the company is able to continuously exist and operate.

For Lorenzo, creating a sustainable business model is just the first baby step of his business. The second step, according to him, is working with local producers in order to elevate the local coffee industry and bring it to the global stage one day. 

It may take some time to reach that next step, so for now Lorenzo plans to open a few more branches and solidify Candid’s team and coffee program.  

“I was able to award a branch to my former intern turned operations manager, and now partner Julia, and I want to be able to do that for the next branches I’d open,” he shared. “Create wealth and share it with the people running it.”