Groundhog Day. A new grocery chain starts operating in Ukraine

A new grocery chain, Babak, has appeared in Ukraine. The convenience store retailer has opened five outlets in Lviv since the beginning of the year. Three more stores are to open in the same city in September.

Four more Babacs are to start operating in Ivano-Frankivsk by the end of the year, said LIGA.net olena Repchanska, Director of Franchising and Development at Babak Ukraine. The company is going to operate in the Ukrainian market using the franchise model.

What are the first results of the work? What are the terms of cooperation and plans of Babak's founders? This was learned by LIGA.net

How Babak will conquer the market

"Babak positions itself as a modern convenience store. Here, in addition to the usual products, you can buy ready-made meals and your own baked goods. Initially, the company focused on young people – schoolchildren and students. However, after opening the first stores, they noticed that their audience was much wider.

"We are surprised ourselves. When we analyzed our competitors, we thought that convenience stores were about young people. But we have a large number of customers aged 60+ who are regular visitors," says Repchanska.

The competition in the convenience store segment in western Ukraine is strong, confirms Olena Repchanska. However, some chains focus on assortment, while others focus on fast food. "Babak sees an opportunity to cover both the market of young people with a request for a quick snack and the segment of mature audience who need products for the home.

"Babak plans to develop as a franchise network. The first stores are its own, and the company is testing and refining the format there," says the source LIGA.net. Franchise sales should start soon. According to Repchanska, the company is already in initial talks with potential partners interested in cooperation.

The Polish convenience store chain Żabka is developing in this format – through the sale of franchises. It has more than 10,500 outlets and is the largest in Poland.

The company has not yet disclosed the amount of investment in the market. However, Olena Repchynska explains that it takes about $50,000-60,000 to open a classic convenience store.

"We have our own investment model. We are currently adjusting it," says the director.

The optimal size of a store targeted by the chain is 60-75 sq. m. The franchise is planned to be sold in two formats: classic and agency. In the first case, a franchisee buys a franchise by investing his or her own money. The partner owns the outlet, has maximum influence on its development, and pays royalties to the franchise owner.

When working in the format of an agent franchise, the network remains the owner of the outlet. The agent works on behalf of the franchisor, not as an independent entrepreneur. He receives a commission on sales or a fixed fee, rather than profit from his own activities.

The founders are Ukrainians and a Pole

Founders network – three Ukrainians and a Pole. They are the Polish company Babak Poland and the Ukrainian venture capital fund Energo-Hub from Ivano-Frankivsk. They are co-founders of Babak Ukraine LLC, which manages the network.

The ultimate beneficial owner of the Polish company is Jędrzej Solnicki, who owns 25% of the ownership structure. Ukrainian owners – Andriy Panas, Vasyl Novak and Roman Paskovych, who own 75% of the management company.

Jędrzej Solnicki has many years of experience in the German discount chain Lidl, which also operates in Poland. He also worked for the largest Polish convenience store chain Żabka, the WPfinanse. He founded his company, BABAK POLAND founded in Wroclaw in September 2024. Its core business is management consulting. The company also provides wholesale intermediation services and is engaged in the wholesale trade of household goods, food and beverages.

Ukrainian Venture Fund Energo-Hub is a part of the ProTec corporate group. The company has extensive experience in working with consumer goods. Since 1998, it has been operating as a distributor of alcoholic and non-alcoholic beverages, food, confectionery, tableware, non-food products, cosmetics and other goods. Thus, the launch of a grocery store chain is a logical continuation of the company's activities.

ProTec also includes an enterprise engaged in the construction of warehouse and industrial real estate. The company owns four logistics centers with a total area of over 155,000 square meters.

ProTec is also engaged in freight transportation in Ukraine, Europe and the CIS, is a recycling operator and food ice producer.

The format of small stores is growing the most

The convenience store format is popular and growing rapidly in Ukraine.

The number of small convenience stores with an area of up to 150 square meters increased by 19% in 2024 compared to 2023. Such outlets sold 32% more goods, and the number of purchases in minimarkets increased by 23% over the year. These are the data from the RAU Expo 2025 exhibition and conference led kateryna Mashoshina, Senior Insight Analyst at Nielsen.

The fact that small format stores are growing rapidly is also evidenced by a study by the GT Partners consulting agency. During 2022-2024, the number of minimarkets increased by 1055 outlets (27.6%), from 2780 to 3835. The number of convenience stores increased by 146 outlets, from 1052 to 1198.

National chains capture part of the market

In the first half of 2025, the largest number of stores of this format – 56 – was opened by Clover Stores from Lutsk, which develops the Sim23 and Simi market chains.

National chains are also investing in this area. Since 2017, ATB co-owner Gennadiy Butkevich has been developing the Kolo convenience store chain. At the beginning of 2025, the chain had 247 stores in Kyiv and Odesa regions.

The Lithuanian chain Novus is also rapidly opening mini-markets. In August this year, it reported on the launch of its 50th convenience store in Ternopil. Novus plans to open 60-70 Mi Market stores every year.

However, it is not only grocery chains that are looking to open small stores. Non-food retailers are also entering the niche. In particular, Epicenter and Eva.

In July 2025, the last of these companies opened a the first minimarket "Eva next door". These stores have an area of about 60 square meters, which is three to four times smaller than standard Eva stores. They have a limited assortment of about 2,000 products instead of 15,000 to 20,000 in full-size stores.

Eva has opened six stores of a new format, they are experimental. It plans to open four more by the end of 2025. The company is currently testing the viability of the concept and assessing whether the stores are breaking even, said LIGA.net viktor Serednyi, Chief Operating Officer of Eva chain stores.

What makes the format attractive

The main advantage of this format and the driver of the sector's growth is the availability of vacant space, explains Igor Guglia, founder of GT Partners.

"It is much easier to find locations for small-format facilities than for large markets," he says.

Andriy Zhuk, co-founder and chairman of the board of RAU, also considers this format to be a promising direction. This is influenced by several factors. One of them is time saving: it is more convenient for people to buy near their homes and not go far.

The offer of ready-to-eat or semi-cooked food offered by such formats is very relevant. Previously, people used to go to big stores – supermarkets and hypermarkets – but now it is more convenient to buy food close to home, emphasizes Zhuk.

"This format is very promising. There are more than ten thousand Żabka stores in Poland. But this is primarily due to the successful franchise system," says Żuk.